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\ 



THE PRESENT CONDITION 



Economic Science 



AND THE 



DEMAND FOR A RADICAL CHANGE 



METHODS AND AIMS 



EDWARD CLARK LUNT, A.M. 

1^0 



" Hold fast that which is good." — i Thessalonians, v.., 21 
■'* Striving to better, oft we mar what *s well." — Ki7ig Lear 



I 



NEW YORK AND LONDON lo ^ ^88 <9 

G. P. PUTNAM'S SONS\^^ii^*3 j (^ 
Wc^z ^nitlurbockcr ^rtss 



K 






COPYRIGHT BY 

EDWARD CLARK LUNT 



Press of 

G. P. Putnam's Sons 

New York 



ANALYTICAL TABLE OF CONTENTS. 



I. 

PAGB 

General Bill of Attainder against Eco- 
nomics 1-6 

Political economy ever distrusted, and economic 
writers always at variance, I — Signs of revolt in 
recent years more rife than ever, 2-3 — Daniel Web- 
ster "gives up " political economy; so do Carlyle, 
Laveleye, Jevons, and others, 4 — Logic under the 
same cloud of popular disfavor, but the case of 
economics peculiarly unpromising, 5-6. 



II. 

Present Condition of Economics Ludi- 
crously Inharmonious . . . 7- 

Economic controversies, from one point of view, 
highly entertaining, 7-8 — The average economist 
the prince of polemics, 9-10 — Economic disputants 
more remarkable for their fortiter in re than for their 
suaviter in modo, 11 — Notwithstanding this for- 
midable introduction, the author espouses the cause 
of the current economics, 12 — And, as a necessary 
part of his defence, ventures an 



iv Analytical Table of Contents. 

III. 

PAGB 

Explanation of the Present Ill-Repute 
OF Economics . . . . . 13-42 

General misunderstanding of the aims and the prov- 
ince of political economy, 13-22 — Economics as a 
science — a systematized body of knowledge : not 
an assemblage of rules aiming at practical ends, 
13-14 [Note : Harvard College and free-trade, 
14-15.] — Nevertheless, all economists concern them- 
selves with practical questions, 16 — And may 
properly do so in view of the distinction between 
pure and applied science, 17 — Failure to make 
this distinction injures economics in two ways : (fl) 
by requiring too much of the science, 18 ; {b) by 
estranging the working classes, 19-20 — The foregoing 
view of economics not over-ambitious, but the only 
view consistent with the scientific character of the 
study, 21 — A second reason for the disrepute of 
political economy found in the anarchical condition 
of the economic world, 22-29 — Diverting psychologi- 
cal study presented by the wages-fund controversy, 
23-24 — Still, the condition of economics is less 
chaotic than would appear at the first blush : a large 
part of the controversies are either insignificant or 
connected with the applications of economics, 25-26 
— Certain controversies, however, are more formi- 
dable, since they concern fundamental questions in 
the science, 27 — But even these graver differences 
may be adjusted: cf., for example, a possible solu- 
tion of the wages-fund controversy, 28-29 — Another 
thing to be noted in connection with the reputation 
of economics — the astonishing incompetence of 
■critics, 30 — Why political economy, more than 
other subjects, suffers from this cause, 31 — The 
supposed pessimistic tone of economic doctrines an- 



Analytical Table of Contents. v 

PAGE 

other reason for the ill-favor of economics, 32-37 — 
How far can apparent resulting harmonies be taken 
as attesting the truth of economic doctrines ? 33 — 
The example of Carey and Bastiat in this respect, 
34 — Some foundation for the common reproach 
in the heavy-hearted views of early economists : cf. 
Malthus and Sismondi, 35 — But the absurdity of 
this reproach follows from the fact that political 
economy is a science : if economics is the " dismal," 
where is the "blithesome" science? 36-37 — Still 
another cause of the unpopularity of economics is 
found in the fact that men's personal interests are 
directly touched by the science, 38 — A final cause 
more reasonable than some of the preceding — the 
mistakes of economists, 39 — Grotesquely errone- 
ous doctrines once taught by political economy, 
41 [Note : Sismondi and general over-production. 
Sismondi's error, under the circumstances, a very 
natural one, 40] — The ground now cleared for the 
second part of our subject — the "demand for a 
radical change," 42 — Various names by which this 
demand is known: "German," "Realistic," "In- 
ductive," and " Historical," 42 — Persistent misrep- 
resentation making necessary a 

IV. 
General Statement of the English 
Method 43-51 

Axiomatic mental principles and undeniable physical 
conditions made the basis of deductive reasoning, 44 
— This reasoning corrected and supplemented by the 
inductive tests of economic history, 45 — The induc- 
tive element, though frequently overlooked by 
critics, an essential part of the English method, 
46 — Singular misconceptions of English doctrines 



vi Analytical Table of Contents. 

PAGB 

in current criticisms, 46-4S — Mr. J. R. Ingrani 
affords a notable example, 49-50 — The new eco- 
nomics more disposed to pull down than to build up, 
51 — So that we may conveniently begin our expo- 
sition of Historical doctrines by examining 



The Negative Side of the New School, 52-73 

The first criticism — that the English method is ex- 
clusively deductive — based on a mistaken idea of 
that method, 52-57 — German economists not agreed 
as to the place of deduction in economic research : 
cf. SchmoUer and Wagner, 52 — Disagreement, too, 
on this point among the English adherents of the 
new school : cf. Leslie and Ingram, 54-55 — The 
theory of the English method calls for the constant 
use of induction, 56 — And practice has conformed 
to the theory, 57 [Note : Ricardo largely respon- 
sible for this criticism, 56.] — A second criticism 
based on the alleged absolute character of the Eng- 
lish doctrines, 57-63 — In point of fact, economic 
principles are closely related to circumstances of 
time and place, 58 — A truth that the new econo- 
mists proclaim with a great flourish of trumpets, 59 
— But the old economists never supposed any thing 
else the case, 60 — As the words of Mill, Bagehot, 
and others evince, 61 — In fact, this truth is im- 
plied in the logical method of the English school, 
62 — The whole thing of theoretical, rather than of 
practical, importance : economics virtually the same 
the world over, 63 — Another criticism alleges 
that the English political economy places too much 
dependence upon competition, 63-68 — Combina- 
tion, no doubt, an increasingly important factor in 
the solution of industrial problems, 64-65 — This 



Analytical Table of Contents, vii 

PAGE 

possibility provided for in the theory of the English 
economics, 66 — And the fact fully recognized in 
the practice of English economists, 67 — Still an- 
other criticism arraigns the English school for its 
attitude toward the doctrine of laissez-faire, 68-72 
— Thereby exemplifying the logical fallacy of 
ignoratio elenchi, 68 — The economic world vastly 
changed since Adam Smith so strongly recommended 
this doctrine, 69 — And perhaps a corresponding 
change should be made in applied economics, 70 — 
But the whole thing is irrelevant to our present in- 
quiry, since the doctrine of laissez-faire forms no 
essential part of English economics, 71 — The fore- 
going are the leading features in the critical as- 
pect of the new economists. Unnumbered minor 
criticisms need not check our progress toward (72- 
73) 

VI. 

The Positive Side of the New School, 74-101 

Insistence upon the use of history the leading fea- 
ture of the new method, 74 — One way of using 
history — SchmoUer's way — already discredited in 
these pages, and, indeed, repudiated by most His- 
torical economists, 75 — Another and more tem- 
perate use of history made by Wagner, 76 — His 
"Historical" method hardly distinguishable from 
the " Orthodox " method, 77 — In fact, the English 
method itself is historical, 78 — As the practice 
of Smith, Malthus, Mill, and others shows, 79 
— And is not called "Historical" only because of 
the greater importance of the deductive element, 
80 — Examination of Professor Smith's contention 
that history can supply economics with general prin- 
ciples, 81 [Note : The folly of ascribing gen- 



viii Analytical Table of Contents. 

PAGB 

eral business conditions to one or another kind of 
tariff policy, 82.] — Historical economists, how- 
ever, invariably take their general principles from 
the " Orthodox " collection, 83 — Thus, so far as its 
leading feature is concerned, the new method is not 
new, 84 — But the Historical school has a good 
title to novelty in merging economics in the general 
science of sociology, 85-91 — The English concep- 
tion of the relation between economics and associated 
subjects, 86 — Historical statements of the new 
doctrine full of " glittering generalities," and greatly 
in need of specific examples, 87-88 — A simple il- 
lustration shows the value of the English method in 
this respect, 89-go — Practice, reason, and analogy 
all against the new view, 91 — A third positive 
characteristic of the new school found in the at- 
tempted " reunion of ethics with political economy," 
92-96 — Ethical interests not neglected in the Eng- 
lish method, 93 — Impracticability of including 
in one science moral and economic considerations, 
94 — Examples illustrative of this, 95 — A final 
positive feature of the new school found in its 
advocacy of paternal government, 96-101 — Little 
here to detain us, since economics is not concerned 
with political theories, 97 — The tendency tow- 
ard government tutelage much aggravated in 
this country by the civil war, 98 — Warning notes 
from authoritative voices, 99-100. 

VII. 

The Results OF OUR Study . . , 102-114 
The chief result seems to be the demonstration of 
the fact that the new school lacks one great essential 
— a raison d'etre, 102 — This conclusion sug- 
gested by the theory of the new school, and 



Analytical Table of Contents. ix 

PACK 

confirmed by the works of that school, 103 — Great 
achievements of the English economics, 104 
[Note : Adam Smith more fortunate than most 
social reformers in securing a speedy recognition of 
his doctrines, 104.] — The issue of this struggle 
between the schools easy to foresee, 106-107 — No 
good reasons why economists should not join their 
forces, and thus more effectively undertake the work 
before them, 108 — Extent and importance of this 
work ; unnumbered economic problems clamoring 
for attention, 109 — These questions especially 
grave in this country, no — Our singular indifference 
in the past to economic science, 111-112 — And con- 
sequent advisability now of wasting no time over 
theoretical questions of method, 113-114. 



BIRD'S-EYE VIEW OF THIS ESSAY. 



The present 
condition of 
Economical 
Science, and 
the demand 
for a radical 
change in its 
methods and 
aims. 



The present 
A. condition of 
economics. 



I. " General bill of attainder against the science." 
II. Chaotic condition of economics. 

a. Wrong conception of the science. 

b. Disputes of economists. 

c. A " dismal science." 

d. Personal interests involved. 
r. M istakes of economists. 

IV. Statement of the English Method. 



Explanation 
III. ofthedis- 
repute. 



The demand 
B. for a radical 
change. 



The nega- 
tive side 
of the new 
school. 



The positive 
side of the 
new school. 



a. English method too deductive. 

b. English method too absolute. 

c. English method over-fond of competition. 

d. E nglish method and laissez-faire. 

a. Use of history. 

b. Economics a branch of sociology. 

c. Ethics and economics. 

d. Paternal government. 



C. Conclusions. 



I. Demand for a change not called for. 



II. No occasion for further discussion of this subject. 



THE PRESENT CONDITION OF ECONOM- 
ICAL SCIENCE, AND THE DEMAND 
FOR A RADICAL CHANGE IN ITS 
METHODS AND AIMS. 



I. 



^* GENERAL BILL OF ATTAINDER THAT HAS 
BEEN BROUGHT AGAINST THE SCIENCE AT 
LARGE." 

The present condition of economic 
science is a thing to be spoken of with 
bated breath. At no period have the doc- 
trines of poHtical economy shared largely 
in the public confidence ; and in recent 
years this disrepute has become increas- 
ingly prevalent. In 182 1, as Professor 
Cairnes has pointed out, Colonel Torrens 
prophesied a speedy end to economic con- 
troversies : " In the progress of the hu- 
man mind, a period of controversy amongst 
the cultivators of any branch of science 
must necessarily precede the period of 



2 The Preseitt Condition of 

unanimity. With respect to Political Econ- 
omy, the period of controversy is passing 
away, and that of unanimity rapidly ap- 
proaching. Twenty years hence there will 
scarcely exist a doubt respecting any of 
its fundamental principles."' Alas for 
human foresight ! Thrice twenty years 
have passed since this unhappy prophecy 
was made, and yet to-day the " period of 
unanimity " seems more remote than ever, 
and the fundamental principles are hedged 
about with the gravest kind of doubt. 
The law of production from the soil, the 
theory of population, the effects of foreign 
trade, the law of rent, the theory of wages 
— these and other vital questions in eco- 
nomic science must even now be regarded 
as moot-points. 

The effect of this uncertainty as to fun- 
damental matters, is clearly seen in the 
wide-spread distrust of political economy. 
Everywhere the doctrines of the science 
are received with the utmost scepticism. 
A few years ago the proposition was made 
to remove economics from its place in the 

' " Essay on the Production of Wealth, " p. xiii. [1821]. 



Economical Science. 3; 

course of the British Association for the 
Advancement of Science, on the ground 
that economic science had never shown 
itself worthy of the name. According 
to Macleod, ''The poHtical economy of 
Adam Smith, Ricardo, and Mill is now 
exhausted — it is a capitt morttittm from 
which no further g-ood can be extracted : 
it is wholy incapable of grasping the great 
economic problems of the day." ' In 1876, 
when the Political Economy Club of Eng- 
land gave a centenary dinner commemorat- 
ing the birth of economics with the publi- 
cation of the " Wealth of Nations," the 
newspapers hinted that the economists 
might more properly solemnize the ob- 
sequies of their science. A recent writer 
in the North A^nerican Review declares 
that " the works of Malthus, Ricardo, 
and Mill are read, not so much because 
they teach us truth, as because they stand 
as mile-posts which serve to measure the 
distance by which thought has passed 
them." Forty years ago Carlyle was 
moved to admonish professors of econom- 

' " Elements of Economics," p. v. 



4 The Present Condition of 

ics in this v/ay : " Soft you a little . 
I preceive that the length of your tether is 
pretty well run, aYid that I must request 
you to talk a little lower in the future."' 
Some time after this, M. Laveleye appar- 
ently preceived that the "length of their 
tether" was completely run, and declared 
that ** political economy, the old orthodox 
political economy of the Smiths, the Says, 
and the Bastiats, is dead, has closed its 
life, and the sentence of death appears per- 
fectly legitimate." According to Ruskin, 
the acceptance of the current doctrines of 
political economy is a standing disgrace to 
the human intellect. Mr. Stanley J evons 
despairs of progress under existing meth- 
ods, affirming that "the only hope of at- 
taining a true system of economics is to 
fling aside, once and forever, the mazy 
and preposterous assumptions of the Ric- 
ardian school." Daniel Webster has re- 
course to arithmetic, and finds that, if we 
take from political economy first all the 
truisms and then all the doubtful points, 
•our remainder will be a quantity closely 

' " Latter-Day Pamphlets," pp. 38, 39. 



Econo77tical Science. 5 

approximating zero ; and he echoes the 
general opinion in these words : " I give 
up what is called the science of political 
economy. There is no such science. 
There are no rules on these subjects so 
fixed and invariable that their aggregate 
constitutes a science." 

The only study at all comparable in this 
respect with political economy is logic. 
Logic shares with economics the contempt 
of the vulgar, and the hesitating, half- 
hearted support of the learned. " Did 
God make man two-legged and leave it 
to Aristotle to make him rational ? " ' tri- 
umphantly queries the logical scoff^er ; and 
in the same breath the " professorial dicta 
of so-called economists " are held up to 
scorn. But logic has this advantage over 
political economy : the students of logic be- 
lieve in the science, however much heretics 
may deride the snaring subtleties of the syl- 
logism. Yet, even those most devoted to 
economic research are distrustful of their 
science. Mr. Bagehot admits^ that polit- 

' C/". Locke: "Of Human Understanding," Book iv., 
chap. 17, sec. 4. 

""Economic Studies," p. 3. 



6 Present Condition of Economical Science. 

ical economy " lies rather dead in the pub- 
He mind. Not only does it not excite the 
same interest as formerly, but there is not 
exactly the same confidence in it." Pro- 
fessor Dunbar complains ' that his coun- 
trymen, after a century of remarkable in- 
tellectual activity in other departments of 
science, have added nothing- to political 
economy. Bonamy Price calls his chosen 
field of work " the mysterious region of 
political economy." Professor Cairnes in 
various places adds to the gospel of eco- 
nomic discontent, affirming that political 
economy has " no small proportion of 
faulty material," lamenting " the confusion 
and contradictions in which the science is 
involved," and acknowledging that the 
study of his life is everywhere regarded 
with " profound distrust." 

' North American Review, Jan., 1876. 



II. 



THE PRESENT CONDITION OF ECONOMICS LU- 
DICROUSLY INHARMONIOUS. 

In every science some doctors disagree ; 
but in political economy few doctors agree, 
and the phrase "jargon of the schools" 
has especial significance. " Nothing can be 
more astonishing or lamentable," says Mac- 
leod, ' " than the difference of doctrines, 
and the antao-onism of economists on al- 
most every point in the science." This 
statement is grievously near the truth ; 
but we have a crumb of comfort in the 
fact that, besides being astonishing and 
lamentable, this "antagonism of econo- 
mists " is at times infinitely diverting. 
What student of political economy has not 
shuddered at the sanguinary battles of the 
economic books? Indeed, the economist 
going forth to battle with his peers is a 

' " Elements of Economics," p. vi. 
7 



8 The Present Condition of 

truly formidable creature. In his right 
hand he carries the lance of excoriating 
satire, in his left the shield of unmeasured 
invective. Below are the greaves of vitu- 
perative epithet, and above the helmet of 
stinging sarcasm. His steed sniffs con- 
tention from afar, and leaps at the pros- 
pect of a scurrilous engagement. 

It should be said, however, that for the 
most part our economic warriors are con- 
tent to use the lighter weapons, — to shoot 
the arrows of insinuation rather than hurl 
the battle-axe of textual expression. The 
economic disputant commonly begins by 
'' venturinof to dissent " from his distin- 
guished opponents ; a little further on, 
he makes bold to hazard the conjecture 
that possibly his opponents are without 
some of the qualifications essential to suc- 
cess in economic research ; and, finally, he 
shows beyond a shadow of doubt that the 
position taken by his opponents is utterly 
repugnant to common sense and reason, 
and could be defended only by those from 
whose cerebral furniture nature had with- 
held some essential appointment. Usual- 



Economical Science. 9 

ly, to be sure, the way in which our econ- 
omist hints at the incompleteness of his 
opponent's mental outfit is the perfection 
of controversial manner ; but, after all, 
Ophelia's words stand out unmistakably 
between the lines : 

" Now see that noble and most sovereign reason, 
Like sweet bells jangled out of tune, and harsh." 

Indeed, what masterly polemics the least 
of economists are ! They have the richest 
vocabulary of qualifying words ; and skil- 
fully attaching these to propositions as 
"■ broad and general as the casing air," 
they commit themselves to no more than 
they cannot help. How artfully they 
hedge their statements ; and what a wealth 
of saving clauses they have formed — " in 
the absence of disturbing causes," "gener- 
ally and somewhat elliptically speaking," 
" modified by a rough, conjectural allow- 
ance," "■ the average results of the general 
actions of great bodies of men." They 
are always calling our attention to suppo- 
sitional cases, fearing, as Bagehot says/ 

' " Economic Studies," p. iS. 



lo The Present Condition of 

to cite instances near at hand, lest those 
same instances should be turned against 
them. They have the most lynx-eyed 
vision for incongfruities and the most sea- 
thingly satirical way of holding them up 
to view. They delight to " cavil on the 
ninth part of a hair," and would delight 
still more, if the division were finer. They 
are constitutionally opposed to assenting 
in any form, even "with civil leer" ; but 
whoever would acquire the utmost facility 
in " damning with faint praise " should 
give his days and nights to the volumes 
of economic writers. Pick up the eco- 
nomic treatise that lies nearest at hand, 
and you will find it full of passages like 
these : " Such a tissue of contradictions 
and inconsistencies " ; " If I may venture 
to conjecture the meaning of this remark- 
able passage (which has a curiously 
Hibernian ring about it), possibly what 

Mr. meant to say was," etc.; " His 

ignorance [an obscure Englishman, John 
Ruskin by name, is the person referred 
to] of the doctrines and works which he 
undertakes to refute is not only extensive 



Economical Science. 1 1 

and profound, but curiously exact and 
minute." 

Sometimes our economists are even less 
mindful of the sztaviter in inodo ; and 
when they do open the flood-gates of 
their invective, it is time for fastidious 
people to move on. These are some of 
the honey-mouthed phrases that they offer 
to ears polite : " The most ludicrous mis- 
conception," "pestilent heresy," "bestial 
idiotism." Horace Greeley, with charac- 
teristic fervor of language, used to call 
his economic adversaries "blear-eyed ped- 
ants." He whom some are pleased to 
denominate " the leading American econ- 
omist" was noted for his warmth of feel- 
ing : Mr. Carey, we are told, " sometimes 
clinched his deliverances with expletives 
and epithets somewhat out of fashion in 
society " ; and another observer declares 
that Carey swore like a bargeman when- 
ever Mill's name was mentioned. 

So much for one view of the present 
condition of economic science. The pic- 
ture of that condition as here presented is 



1 2 Present Condition of Economical Science, 

by no means a flattering one. In all these 
quoted opinions there has been no lack of 
accentuation ; and nothing would be easier 
than the multiplication of such quotations. 
Still, there is something to be said on the 
other side of the question ; and in the rest 
of this essay the attempt will be made to 
present that other side, and to show that 
the present condition of the science, bad 
as that condition undoubtedly is in some 
respects, is yet not altogether hopeless, 
and, at all events, is not likely to be im- 
proved by the methods commonly recom- 
mended for that purpose. It is not, per- 
haps, the part of a good advocate to pre- 
sent the worst side of his case at the start ; 
but a just cause can afford to neglect the 
arts of the court-room, and will deem 
judicial impartiality of the first importance. 
Since, however, we have called attention 
so pointedly to this wide-spread distrust 
of economics, it behooves us, if we are to 
justify the pretensions of existing methods, 
to account satisfactorily for this notable 
disrepute ; and it is to that task, accord- 
ingly, that we will now address ourselves. 



III. 

EXPLANATION OF THE PRESENT ILL-REPUTE 
OF ECONOMICS. 

A fundamental cause of the dark clouds 
of distrust with which the economic sky 
is now overcast may be found in the 
widely current misconception of the 
aims and the province of political econ- 
omy. What the function of the science 
is becomes clear when we remember that 
political economy is a science ; for science 
is defined as " knowledge that is its own 
end," that is to say, knowledge that does 
not aim at a practical end. The object of 
a science is to get knowledge, to discover 
laws, to ascertain the causal connection 
between phenomena ; and the object of 
economic science is to discover the laws 
underlying the production and the distri- 
bution of wealth — to ascertain what eco- 
nomic effects follow what economic causes. 
13 



14 The Present Condition of 

So much and so much only does poHti- 
cal economy, as a science, set before itself. 
Accordingly, economics, conceived in this 
way, does not say that free trade is a bet- 
ter commercial policy than protection ; 
but the science does declare that inter- 
national exchanores of commodities take 
place only when economy of production 
would be thereby promoted ; and a legis- 
lator might, under conceivable circum- 
stances, deduce from this scientific fact 
some such practical conclusion as the fore- 
going.' In like manner political economy 

' Some people seem to think that there are two sciences of 
political economy, one teaching free trade and the other pro- 
tection. This is the view, apparently, of a certain Boston 
editor, a believer in protection, who advised a friend of the 
writer's not to study political economy at Harvard College, 
because " they do not teach it properly there." Of course, 
there can be no question as to the impropriety of using the 
prestige of a professorial chair for the purpose either of aid- 
ing or of opposing a political movement. What the editor 
had in mind when he gave the foregoing advice was the atti- 
tude of the economic department at Harvard on the question 
of free trade ; but, if I may judge from a somewhat intimate 
acquaintance with that department, his strictures vi^ere utterly 
unfounded. Having sat for four years under one of the 
leading professors of economics at Harvard College, I think 
I do not exaggerate in saying that never in all this time has 
he delivered a sentence from the lecturer's platform that 
would positively identify him with any particular commercial 



Economical Science. 1 5 

is absolutely dumb when asked whether 
communism or private property is the better 
institution ; though here again the science 
will at once respond when questioned 
about the ascertained laws underlying 
these different systems of distribution. 
" The economist's conclusions," says Sen- 
ior, " do not authorize him in adding a 
syllable of advice " ; a proceeding that 
would be a simple impertinence in view of 
the fact that the scientist's business is, not 
to give advice, but to seek and to ascer- 
tain truth. In fine, political economy is 
not moral nor social philosophy, nor legis- 
lation, nor yet the science of government. 
Political economy is none of these ; and 
insistence upon this fact is, as we shall try 
to show in a moment, not wholly uncalled 
for. But it will not do to leave the mat- 
ter here ; for the question at once arises, 
How is it, then, that so large a part of the 
books on economics is taken up with dis- 
cussions of these practical matters ? All 

policy. Of course, there have not been wanting inferential 
evidences of his views ; but it has always been the economist, 
and never the politician — always the judge, and never the 
advocate, — that has occupied the academic chair. 



1 6 The Present Condition of 

economists, from Adam Smith, who made 
his book a mighty engine for the over- 
throw of the mercantile system, to the 
present American economists, who are 
battling for a liberalized tariff, have aimed 
at practical ends ; that is, have concerned 
themselves with questions not strictly 
within the domain of political economy. 

There are two ways in which to defend 
this conduct. Cicero, in a familiar passage, 
declares that all studies pertaining to lib- 
eral knowledge are united by a certain tie 
of kinship ; and in the case of the social 
sciences this '* qitcddani commune vinctt- 
lum'" is especially binding. This mutual- 
ity and close interrelation of social studies 
seems to some economists a sufficient jus- 
tification for the introduction of practical 
questions into their books ; but a more 
secure warrant for such a proceeding is in- 
dicated by Mill, when he calls his book : 
" The Principles of Political Economy : 
with Some of Their Applicatioiis to Social 
Philosophy^ The clause of this title that 
I have italicized shows the ground upon 
which an economist has a risfht to deal 



Econoviical Science. i 7 

with practical questions— a right based on 
the distinction between the pure or appHed 
science and appHed arts. Just as the sci- 
ence of astronomy furnishes material for 
the art of navigation ; just as the science 
of geometry is the basis for the applied 
arts of surveying and engineering : so the 
abstract science of political economy fur- 
nishes data to be utilized in the arts of 
taxation, banking, and so on. 

"■ All this is true enough," says some 
demurring reader, '' but what is the use of 
emphasizing these refinements ? Why are 
you at such pains to assure us that the 
Dutch have taken Holland ? " Undoubt- 
edly, it is a theoretical and a sufficiently 
obvious distinction to which we call atten- 
tion here ; nevertheless, many detractors 
of political economy have overlooked this 
distinction ; and a large part of the criti- 
cisms of economics lose all their force 
when confronted with the right under- 
standing of the province of the science. 
In fact, misconception of this province 
brings political economy into disrepute in 
two ways — (<^) by causing people to ex- 



1 8 TJie Present Condition of 

pect impossible things from the science, 
(J)) by alienating a class of people to whom 
it is especially important that political econ- 
omy should not be repugnant. 

First, we say, this failure to recognize 
the proper office of economics imposes 
upon the science, already staggering un- 
der its burdens, graver responsibilities than 
any science can assume. Political econ- 
omy, according to one view, must either 
show that whatever is, is right ; or must at 
once make right whatever is wrong. Mr. 
Ruskin upbraids political economy for not 
preventing strikes ; but what has political 
economy to do with preventing strikes ? 
Just as reasonably might one abuse as- 
tronomy for not preventing shipwrecks, or 
hold chemistry accountable for dynamite 
explosions. In the same way Mr. H. D. 
Lloyd speaks ' of political economy as " the 
science that claims to be able to reconcile 
self-interest with the harmony of inter- 
ests." Some students of political econ- 
omy — notably Carey and Bastiat— have 
advanced some such Utopian view of the 

' Atlantic Monthly, v. 50, p. 70. 



Economical Science. 19 

universe ; but the science of political econ- 
omy could not becomingly make such pre- 
tensions — in fact, could not '' claim " any 
thing except a single-hearted purpose to 
discover truth. 

The second serious consequence of mis- 
interpreting the aim of economics — 
estranging from the study the laboring 
classes — has been pointed out ' by Profes- 
sor Cairnes : " Political economy too often 
makes its appearance, especially In its ap- 
proaches to the working classes, in the 
guise of a dogmatic code of cut-and-dried 
rules. . . . Now when we take into 
account the sort of decrees which are 
ordinarily given to the world in the name 
of Political Economy — decrees which, I 
think I may say in the main amount to a 
handsome ratification of the existing form 
of society as approximately perfect — I 
think we shall be able to understand the 
repugnance, and even violent opposition, 
manifested towards it by people who have 
their own reasons for not cherishing that 
unbounded admiration for our present in- 

' " Logical Method," pp. 25, 26. 



20 The Prese7it Condition of 

dustrial arrangements which is feh by 
some popular expositors of so-called eco- 
nomic laws. When a working- man is told 
that Political Economy 'condemns' strikes, 
hesitates about co-operation, looks askance 
at proposals for limiting the hours of labor, 
but ' approves ' the accumulation of cap- 
ital, and ' sanctions ' the market rate of 
wages, it seems not an unnatural response 
that ' since Political Economy is against 
the working man, it behooves the working 
man to be against Political Economy.' " 
What wonder is it that, under these con- 
ditions, the working man fears political 
economy even when it brings him priceless 
gifts ? The truth is, of course, that politi- 
cal economy merely asserts that certain 
effects follow certain causes, without pred- 
icating any thing whatever as to the char- 
acter of those effects, whether they be 
good or bad ; and it is equally a matter of 
course that political economy does not 
" condemn " one thing any more than it 
"approves" another. Chemistry tells us 
what effect follows the introduction into 
the human system of a quantum sujjicit of 



Economical Science. 2 1 

prussic acid ; and may be said, in a certain 
sense, to " condemn " the personal appli- 
cation of that acid ; it is only in a similar 
sense that political economy can be said to 
condemn any thing. 

This conception of economics as a 
science, with the necessary limitations of 
a science, is no doubt disappointing to the 
ambition of some economists ; but such a 
conception is required by the nature of the 
study ; and, moreover, whatever the science 
loses in the grandeur of its aim will be 
more than made up in the number and 
greater value of its achievements. Only 
by thus narrowing the field can we hope, 
with Mr. Bagehot, to show that ''political 
economy is not a questionable thing of 
unlimited extent, but a most certain and 
useful thing of limited extent." ' We shall 
have to recur to this subject at a later 
stage of our discussion, in connection with 
the doctrines of the new school of econom- 
ic writers : the point that we would em- 
phasize here is, that the present unsatis- 
factory condition of economics, as regards 

' " Economic Studies," p. 2i. 



2 2 TJie Pr^esent Condition of 

popular favor, is traceable in part to a 
general misunderstanding of the real prov- 
ince of the science. 

A second reason for the ill-repute that 
attaches to economics at present may be 
found in the seemingly chaotic condition 
in which the science is left by its ever- 
discordant expounders. Probably Mr. 
Cairnes is right in saying ' that if we in- 
clude all economic writers — sciolists as 
well as men of established reputation, — 
there is not a single doctrine of the science 
that is undisputed. Of course, a large 
part of these dissentients may be dis- 
missed with the same mild compassion 
that we bestow upon the occasional 
*' crank " (what other word will do ?), who 
stakes his fortune on the flatness of the 
earth. Still, a considerable body of au- 
thoritative writers disagree, or, at any 
rate, seem to disagree, on cardinal points 
in the science. A somewhat emphatic 
but fairly typical example of this is af- 
forded by one phase of the famous wages- 

' " Logical Method," p. 2ig. 



Economical Science. 23 

fund conuroversy — a controversy so aptly 
illustrative of what we said about eco- 
nomic disputants, and so delightfully di- 
verting withal, that we cannot forbear a 
brief description. 

Economist A. propounds a theory of 
wages, which is generally accepted, and 
becomes a part of all the books on the 
subject. After many years economist B. 
attacks this doctrine by asking a series of 
questions on the points involved, or sup- 
posed to be involved, in the theory. " It 
sounds like mockery or childishness to 
ask these questions," says B., " so ob- 
vious are the only answers that can pos- 
sibly be given to them ; yet it is only on 
the assumption that directly opposite an- 
swers must be given that the wages fund 
can for one moment stand." Now, eco- 
nomist A. has long since put away child- 
ish things, and, admitting the pertinency 
of these questions, he surrenders at dis- 
cretion. If the blind lead the blind, both 
shall fall into the ditch, thinks economist 
C, who now steps into the arena to take 
up the cudgels against both A. and B. 



24 The Present Condition of 

C. is lost in wonder at the alacrity with 
which A. beat a retreat, and he cannot 
believe his senses when he finds him ac- 
cepting B.'s series of questions as involv- 
ing a fair statement of the wages-fund 
theory, C. would have "confidently as- 
serted, he will not say that no economist, 
but that no reasonable being had ever ad- 
vanced the theory of a wages fund in that 
sense." A charitable world has commonly 
regarded John Stuart Mill as a "reason- 
able being," and would probably place 
Mr. Cairnes and Mr. Thornton in the 
same exalted category. Nevertheless, 
each of the three solutions of this eco- 
nomic problem presented by these three 
reasonable men seems to one of those 
men eminently rational, and to the other 
two grotesquely absurd. Episodes of this 
kind are not without a certain interest, es- 
pecially from a psychological point of view ; 
but they hardly redound to the credit of 
political economy, as they certainly do 
not inspire confidence in economists. 

But the case might be worse ; the pre- 
sumption against economics, arising from 



Economical Science. 



^b 



the lack of harmony among economic 
writers, is not so strong as might at first 
appear. A very large proportion of the 
unnumbered economic controversies would 
fall into one of the three following classes : 
(a) Many controversies relate rather to 
form than to substance, and are, after all, 
of minor importance. Gallons of good ink 
and tons of excellent paper have been con- 
sumed to no better purpose than " doting 
about questions and the strifes of words," 
— mere matters of definition. Whether 
or not the term wealth should include 
mental qualities and acquired skill, wheth- 
er or not actors and musicians should be 
classed as productive laborers — these and 
many other questions of nomenclature are 
interesting enough in their way, and are 
not without a certain importance ; but the 
existence of such questions does not argue 
a serious imperfection in the science, (d) 
Many supposed issues would be found, if 
the disputants understood each other, to 
belong to what Professor Simon Newcomb 
calls ' " that large and alluring class of 

' "Principles of Political Economy," preface. 



26 The Present Condition of 

questions in which there is no point at 
issue." In economics, as in other depart- 
ments of knowledge, infinite trouble 
arises, because "■ some people will not take 
the trouble to understand what other peo- 
ple say." {c) By far the larger part of 
the so-called economic controversies relate, 
not to the science itself, but to its applica- 
tions ; and such contentions, as we have 
tried to show in preceding pages, are not, 
properly speaking, economic controversies 
at all. 

A very large proportion of the disputes 
in economics would be included, as we 
have said, in the foregoing classes ; and 
their existence, accordingly, would not 
constitute a very formidable indictment 
against political economy. But it cannot 
be denied — and it ought, perhaps, to be 
pointed out here — that another set of con- 
troversies are far more dangerous to the 
good repute of economics, and call in 
question the very foundation upon which 
the science rests. It would take us too 
far afield to attempt an adequate defence 
of this condition of things— not to men- 



Economical Science. 2/ 

tion the trifling circumstance that the 
task is altogether beyond our powers. 
Still, sometimes a Davus can suggest a 
plan that only an CEdipus can execute. 
As regards most of these fundamental 
controversies, both statements of the case 
seem reasonable ; and, where this is so, 
perhaps our wisest course will be, not to 
insist upon a single view of the question, 
but to search for some common ground 
upon which diverse opinions may be com- 
promised and reconciled. 

Take, for example, the wages-fund con- 
troversy — a fundamental question and yet 
one upon which economists seem to be 
hopelessly divided. That the wages of 
labor are causally connected in some 
way with the product of labor, seems not 
to require argument, and General Walk- 
er's theory of wages, of which this propo- 
sition is the gist, seems, accordingly, inca- 
pable of refutation. When, however, we 
turn to that facile princeps of recent 
economists. Professor J. E. Cairnes, we 
find another theory of wages, consisting of 
a chain of reasoning of which the several 



28 The Present Condition of 

links are so firmly bound together that 
the best equipped logician cannot hope to 
tear them asunder. Must we, then, in the 
face of these two rival theories, admit 
that this important block in the econom- 
ic groundwork is insecure ? There are 
two avenues of escape from this conclu- 
sion — (a) by showing that one of the 
theories is logically at fault ; (^) by show- 
ing that one of the theories includes the 
other, or that the two are reconcilable. 

The former of these conceivable ways 
out of the difficulty is closed to us, since 
both theories seem to be logically without 
a flaw ; but the other loophole remains, 
and, in fact, is sufficient for our purposes. 
For why are the two theories incompat- 
ible ? General Walker's chapter on the 
wages question ^ has commonly been re- 
garded as laying down new views ; but it 
seems sufficiently clear that Mill and his 
school recognized the part that the prod- 
uct plays in determining wages. The 
production of a series of years determines 
(conjointly with other things) the amount 

' " Wages Question," chap. ix. 



Economical Science. 



29. 



of capital that will be in existence at the 
end of these years : and at this point Pro- 
fessor Cairnes's theory comes in to deter- 
mine the rate of wages. The two theories 
view the situation from somewhat different 
standpoints, and serve somewhat different 
purposes ; but the theories are not mutual- 
ly exclusive, and the economic substruct- 
ure is rather strengthened than weakened 
by these complemental doctrines. 

What is true of the controversy as to 
wages is probably true in the case of 
other fundamental questions, namely, that 
opposing views may be reconciled and 
shown to be essentially consistent. As 
regards the question with which we are 
immediately concerned — that of economic 
methods — we shall find something distinct- 
ly like this to be the case. 

In my endeavor satisfactorily to account 
for the present disrepute of economics, I 
must not forget a circumstance that will 
readily suggest itself to any one familiar 
with economic discussions, namely, the 
startling incompetence of many critics 
of political economy. Mill deems it an 



30 The Present Condition of 

advantage that the nomenclature of eco- 
nomics is made up of words in common 
use : and undoubtedly this would be an ad- 
vantage, if these common words had their 
common meanings. But the fact is, that 
the most important terms in economics — 
for example, rent, capital, distribution, cost 
of production — have meanings strictly 
technical, and frequently quite unlike the 
common meaning ; so that the advantage 
in this nomenclature is, after all, rather 
dubious. Tell the average untaught man 
some marvel of astronomy — that Arcturus 
travels fifty-four miles a second, or that 
the North-star, for aught we know to the 
contrary, may have been annihilated forty- 
eight years ago, and he will listen in large- 
eyed wonder, and will never dream of dis- 
puting your statement. But tell the same 
man some economic commonplace — that 
the millions of dollars paid every year in 
rent has no effect on the price of bread, or 
that high wages indicate low cost of pro- 
duction : and this time, too, he will listen 
in wide-mouthed astonishment' — astonish- 
ment at your "plentiful lack of wit." 



Economical Science. 3 1 

Cost of production is a familiar phrase to 
him, and your statement will cause him to 
look at you suspiciously, to tap his fore- 
head significantly, and, finally, to direct 
you to the nearest lunatic asylum. 

So it is in many cases. The technical 
terms of economics are familiar to every 
one ; and every one, consequently, feels 
competent to sound the depths of any eco- 
nomic question. If the bare-footed phi- 
losopher of Athens could walk our streets 
to-day, he would find, in the discussions of 
economics, abundant opportunities for en- 
joying his favorite pastime — exposing 
" the conceit of knowledge without the re- 
ality." No one, without having first made 
some study of the subject, would presume 
to give an opinion upon a nice point of 
chemical analysis ; nor would any one at- 
tempt to discuss off-hand the theorem of 
homogeneous functions or the subtilties 
of the solar parallax : but every man you 
meet can tell you all about taxation and 
finance, even though he has never opened 
an economic text-book. In these days of 
learned blacksmiths and ofeologfist stone- 



32 The Prese7it Condition of 

masons one has to be very careful about 
warning shoe-makers not to go beyond 
their lasts : but perhaps the ancient adage 
might be aptly quoted at times to our 
curbstone economists. " It would be too 
much to expect," says one writer, in the 
bitterness of his heart, '* that those who 
attack political economy should make a 
serious effort to know any thing about it." 

Political economy has gained nothing 
before the world from a wide-spread notion 
that economic doctrines are tinned or, 
rather, deeply dyed with the darkest kind 
of gloom. It was Carlyle, we believe, 
who first called economics "the dismal 
science " : but the world quickly caught up 
this lucus a non hicendo, feeling assured 
that political economy had come into being 
only to answer in the affirmative the po- 
et's question, 

" O Star-eyed Science ! hast thou wandered there 
To waft us home the message of despair ? " 

Mr. Rickards of Oxford declared ' thirty 
years ago that political economy charged 

' " Population and Capital," preface. 



Economical Science. 2)o 

the Creator Vv^ith having made a " miscal- 
culation of means to ends in the arrange- 
ments of the universe " : and the latest at- 
tempt to raze the economic structure to 
the ground — that of Mr. Henry George — 
emphasizes this count in the general in- 
dictment against political economy. 

The first thing to be said about this 
view of economics is, that it has a certain 
foundation in fact : and the next thing to 
be said is, that this foundation is very 
unsubstantial, and is quite incapable of 
supporting any serious charge against the 
science. In the first place, one may well 
ask how far, in a world so badly put to- 
gether as ours, apparent resulting harmo- 
ies can be accepted as establishing the 
truth of an economic proposition. Cer- 
tainly, Bastiat's example will not inspire 
confidence in the accuracy of this test : 
since, in his case, we have a "set of har- 
monies which, it seems to be agreed on 
all sides, are admirable in every respect 
except consonance with fact."' There is 
no doubt, I suppose, that much of Henry 

^ C. r. Dunbar, Quarterly Journal of Economics, No. i. 



34 The Present Condition of 

C. Carey's extraordinary popularity is due 
to the harmonious and optimistic nature of 
his doctrines : but it is difficuh to make 
out the economic sfrounds on which he 
based his rose-colored views of the uni- 
verse. ' 

I admitted, just now, some slight foun- 
dation for the popular notion that identifies 

' In the preface to " Social Science " Carey lays claim to 
three great discoveries, of which the first and second are, re- 
spectively, a theory of value embracing all kinds of products, 
and the idea of a certain kind of distribution betv/een cap- 
ital and labor, by which capital gets a continually 
decreasing, and labor a continually increasing, pro- 
portion of the return. Then Carey goes on to say 
that the " third and fundamental law remained to be dis- 
covered and may be found in the second chapter of the 
present volume." Diligent search in that chapter will not 
bring to light any "great law." Perhaps Mr. Carey referred 
to what is contained in a paragraph on the thirty-seventh 
page. " We have here the great law of Molecular Gravita- 
tion," etc. He seems to think that there is a social law of 
gravitation analogous to that of the physical world. Most 
readers, however, would regard his language as nothing more 
than an injudicious use of metaphor to illustrate the flights of 
a daring imagination. It is worth while to note the fact that 
Carey's followers have not in all cases trodden in the steps 
of their master. Professor Robert E. Thompson, for ex- 
ample, accepts the law of value and the anti-Ricardian law, 
but is not so certain of the resulting harmony ; and he has 
nothing to say about the elusive law for which we have just 
been searching — the " law of Social Gravitation." 



Economical Science. 35 

economics with the Slough of Despond : 
and it cannot be denied that some of the 
earHer economists could hardly have fur- 
nished much inspiration for a Miltonic 
" L 'Allegro." Malthus, for example, de- 
clares': "If my views are adopted, we 
shall be compelled to acknowledge that 
the poverty and misery which prevail 
among the lower classes are absolutely ir- 
remediable." Elsewhere Malthus cheers 
on sanitary commissioners with this confi- 
dent assertion : " I feel not the slightest 
doubt that if the introduction of the cow- 
pox should extirpate the small-pox and 
yet the number of marriages continue the 
same, we should find a very perceptible 
difference in the increased mortality of 
some other disease." In 1819, Sismondi 
published his ''New Principles of Political 
Economy," their chief claim to novelty re- 
siding in the high-pitched tone of despair 
with which they discussed all things hu- 
man. The industrial machinery of the 

1 Preface, first edition of the essay on population. It 
should be said that in subsequent editions this view was some- 
what modified ; Malthus was able to "soften some of the^ 
harshest conclusions." 



.36 TJie Present Condition of 

world seemed to Sismondi to have been 
thrown permanently out of gear : and, 
though he advocated some extraordinary 
remedies, of which economics is not proud, 
he still felt obliged to admit that the case 
was utterly hopeless. 

When political economy presents itself 
in such an attitude as this — when leading 
economists can find no better occupation 
than " folding their arms and leaving the 
deno2Lenient X.O \ayvlq. and Providence" — it is 
not surprising that " economists " and 
"pessimists" should become in the popu- 
lar vocabulary convertible terms. Never- 
theless, the answer to all this is not far to 
seek, and is found in the proper concep- 
tion of economics. When we remember 
that political economy consists of deduc- 
tions and inductions, of series of syllo- 
gisms and chains of reasoning, of a body 
of logical processes leading up to and es- 
tablishing certain irrevocable laws— laws 
in the sense of the Newtonian laws of mo- 
tion or the law of gravitation,— when we 
remember this, we see at once that such an 
epithet as "dismal" is not applicable to 



jEconoTnical Science. 2)7 

political economy. What should we think 
of the man who should say, " The tenth 
proposition of Euclid has always seemed 
to me shamefully hard-hearted " ; or of the 
man who, because railroad accidents some- 
times occur, should call mechanics a " pecu- 
liarly inhuman science " ? If such quali- 
ities were predicable of a science, economics 
might more truly be described as benevo- 
lent, since it contemplates, through its 
applications, better and better conditions 
of human existence. 

Another source of the present deep- 
seated prejudice against political economy 
may be found in the circumstance that 
men's personal interests are directly in- 
volved in the science. The cynical 
Hobbes declared that the axioms of geom- 
etry would be disputed, if men's passions 
were implicated therein ; and Archbishop 
Whately, with an equally exact knowledge 
of human frailties, said that the demon- 
strations of Euclid would not have com- 
manded universal assent if they had been 
applicable to the pursuits of individuals. 
That the Bessemer steel manufacturers. 



38 TJie Present Condition of 

or the Nevada silver kings, or the extreme 
socialists, should receive political economy 
with open arms and proclaim its merits 
from the housetops, is not to be expected 
at this distance from the millennium : and 
even that the more numerous class of 
people, whose immediate interests are less 
closely connected with economic doctrines, 
and who merely find the truths of eco- 
nomics somewhat unwelcome — that such 
persons should be loud in their praises of 
political economy, is not in the course of 
human nature. Still, it is not a philo- 
sophic procedure to call a science names 
because it brings to light disagreeable 
truths. Besides, there is little to be gained 
by railing at the tranquil facts of the uni- 
verse : " The only argument available 
with the east wind," says Lowell, "is to 
put on your overcoat." 

A final cause of this extensive disaffec- 
tion with economic science — a more deep- 
reaching cause, perhaps, than some of 
those hitherto noticed — is to be sought in 
the mistakes of the expounders of that 
science. Bastiat's famous conceit of the 



Economical Science. 39 

chandlers' and lamp-manufacturers' peti- 
tion for the exclusion of the light of the 
sun has its counterpart in some of the 
doctrines actually promulgated at different 
times by economists. Madame de Stael 
said that she was sorry to hear that a man 
had made a good bargain, because she 
knew that the other man had made a bad 
bargain ; and she might have pleaded, in 
defence of this view, the authority of one 
of England's greatest economists before 
Adam Smith : for Sir James Stuart used 
the same reasoning in the case of inter- 
national trade, declaring that, " if one 
country gains, another must lose." ' That 
a pound of lead is no heavier than a pound 
of feathers,"" is known in every kinder-gar- 
ten : but a whole school of economists 
once taught that a dollar's worth of gold 
was worth more than a dollar's worth of 
any thing else ; and the policy of great 

' " Inquiries into the Principles of Political Economy " 
(1767). Compare Voltaire : " Such is the condition of hu- 
manity that to wish the greatness of one's own country, is to 
wish evil to one's neighbors. It is clear that one country can- 
not gain unless another loses." 

^ Henry George uses this illustration for a similar purpose. 



40 The Presejit Conditioti of 

nations was shaped on this assumption. 
One of the ablest of French economists 
deprecated the use of machinery, and ad- 
vised the government to discourage inven- 
tions by refusing to grant patents/ 

These and many other economical the- 

' These very unorthodox products of political economy, 
brought to maturity by Sismondi, will appear less exotic, if 
we recall the circumstances under which they grew up. The 
decade immediately succeeding the Napoleonic wars forms, in 
the industrial history of the world, an epoch of which the 
counterpart cannot easily be found. The commercial world 
found itself, after the wars of the French Revolution, in a 
most abnormal condition — a great transformation of industry 
due to English inventions, the shock to existing arrangements 
implied in the transition from war to peace, the changed con- 
ditions under which division of labor was to be resumed : 
and all complicated by a progressive fall of prices due to im- 
proved processes and by tariff changes in the case of leading 
countries. There is only one way of describing such a condi- 
tion of things — it was a time of adjustment between supply 
and demand, a period of transition from one industrial age to 
another. So strong a case for the theory of a general over- 
production was never presented before, and probably will 
never again arise. We need not wonder, then, that Sismondi, 
living in the midst of the movement and therefore viewing it 
with no perspective, allowed the things that were seen to 
blind his eyes to other discernible things. Mr. Edward At- 
kinson is anxious to examine the ' ' outside of the head of any 
one who pleads a general over-production, in order to see 
how his brain is constituted, and what element of common- 
sense has been omitted in his make-up." But even common- 
sense is not enough in the case of some economic problems ; 
there must be added a very uncommon discretion. 



Economical Science. 41 

ories of the past may be classed with the 
"Portuguese Phrase-Book," as "jest in 
sober earnest " : but even the current 
economic doctrines, though not so ludi- 
crously erroneous as some of their prede- 
cessors, are yet far from invulnerable. 
Economists sometimes draw their infer- 
ences prematurely ; they are prone to push 
doctrines too far, to state conclusions in 
too absolute a form ; and they frequently 
fail to notice disturbing elements, thereby 
making their principles unduly inelastic. 
Of course, all this is saying only that 
economists are men : still, the effect of 
such mistakes on the reputation of econom- 
ics is none the less marked ; and perhaps 
to this cause — the shortcomings of eco- 
nomists — as much as to any other, is due 
the present disrepute of political economy. 

By the foregoing exposition of what we 
conceive to be causes adequately and sat- 
isfactorily explaining the stigma that rests 
upon economic studies, we have cleared 
the way, perhaps, for the second part of 
our subject — " the demand for a radical 
change " in the methods and aims of 



42 Prese7it Condition of Economical Scie7ice. 

political economy. That demand, as our 
glance at the present condition of eco- 
nomics showed only too well, is imperative 
and persistent, and deserves attention not 
less from the authoritative character of 
the makers than from their number. The 
first sign of revolt appeared in Germany, 
in Wilhelm Roscher's writings, so far back 
as 1843 ' • ^'f^d throughout the contest the 
Germans, with their characteristic /^;2^//(2;^2? 
for contention, have been foremost in stir- 
ring up mutiny in the economic camp. 
Partly from this circumstance the new 
school has sometimes been called the 
" German " school : but the movement 
soon outgrew this name. Equally insuf- 
ficient is the epithet " Realistic," though 
it serves the useful purpose of covertly re- 
proving the alleged abstract character of 
the "Orthodox" economics. No one who 
has the interest of the new school at heart 
will admit the adequacy of the term " In- 
ductive." The word " Historical " is, per- 
haps, most suggestive of the real character 
of the new movement. 

' " Grundriss zu Vorlesungen iiber die Staatswirthschaft nach 
geschichtlicher Methode." 



IV. 



GENERAL STATEMENT OF THE ENGLISH 
METHOD IN ECONOMICS. 

The careful and complete exposition of 
the methods of the English school, given 
by Professor Cairnes in his " Logical 
Method of Political Economy," ought to 
prevent any misapprehension as to what 
that school professes to do. The fact, 
however, that misapprehension exists, is 
clearly shown by the nature of the objec- 
tions made to the old school. Before at- 
tempting, therefore, to expound the doc- 
trines of the new school I must in self- 
defence trace out roughly the general lines 
upon which the "Orthodox" economists 
develop their science. 

In fact, the method of the English 
economists is extremely simple. Starting 
with certain mental principles, so manifest 
that statement and demonstration are 

43 



44 The Prese7tt Condition of 

one, and adding to these certain physical 
conditions, less obvious than the mental 
principles but equally beyond dispute, the 
economist finds in these premises a sound 
basis for deductive reasoning. These few 
premises, embodying the leading causes 
in the production and the distribution of 
wealth, form the groundwork upon which 
all economic science must, according to 
the English school, be established. It is 
not, however, supposed that this founda- 
tion alone is sufficient to support the vast 
superstructure of political economy. The 
complexity of human nature is so great, 
and the facts to be taken account of are 
so numerous, that we cannot hope to 
formulate all the causes affecting the 
phenomena of wealth. The most that 
we can do is to lay down these broad and 
universal truths, and to incorporate among 
them, as the science grows, such other 
subordinate influences as are seen to be 
effective economic motors. 

The laws of political economy are, for 
the most part, inferences from these gen- 
eral facts : and, if there were not numerous 



Economical Science. 45 

exceptional cases and modifying circum- 
stances, the maxims of the science, as Pro- 
fessor Francis Bowen says, ' might be 
taken for granted, and poHtical economy 
might be called an intuitive or even a de- 
monstrative science. But man is a many- 
impulsed creature, and the economist has 
constant need to remember the logician's 
warning that " there is a false simplicity 
about analysis, a standing failure in all 
attempts to cram the universe into labelled 
nut-shells." What befalls the economist 
v/ho forgets this has been happily illus- 
trated by Mr. Ruskin : " We have made 
learned experiments upon pure nitrogen, 
and have convinced ourselves that it is a 
very manageable gas ; but behold ! the 
thing which we have practically to deal 
with is its chloride, and this, the moment 
we touch it on our established principles, 
sends us with our apparatus through the 
ceiling." Disturbing causes in econom- 
ics frequently enough have this chem- 
cal nature : and the economist is obliged 
at every step to test his conclusions reach- 

' "American Political Economy," p. 131 (ed. of 1859). 



46 The Present Condition of 

ed by deductive reasoning with the actual 
course of affairs in the economic world : 
that is to say, induction corrects and sup- 
plements deduction in the logical method 
of the English school. 

According to Cliffe Leslie, ' there are 
two systems of economics descended from 
Adam Smith, of which one combines the a 
priori 2indi the inductive methods in the way 
that I have just described. But Mr. Leslie 
speaks of another system," of which Mr. Ri- 
cardo was the founder, reasoning entirely 
from hypothetical laws or principles of na- 
ture, and discarding induction, not only for 
the ascertainment of its premises, but even 
for the verification of its deductive conclu- 
sions." ^ I must admit that I never before 
heard of this latter school ; and my brows- 
ings among economic books have never 
discovered any products of such a school, 
— a regrettable fact, since economic litera- 
ture with such a foundation could not fail 
to be highly entertaining. Without chal- 
lenging Mr. Leslie's statement more dis- 

' " Essays on Political and Moral Philosophy," p. 151. 
* " Essays," etc., p. 151. 



Economical Science. 47 

tinctly, it is sufficient here to say that the 
method described by him is certainly not 
the EngHsh method — at least, if we may 
allow English economists to define their 
own method. That method, as we have 
seen, uses deduction and induction alter- 
nately, and accounts the verification and 
correction of conclusions by the inductive 
tests of experience no less important tlian 
the forming of conclusions by deductive 
reasoning. 

One economist, impatient of certain mis- 
conceptions of his views, declared, with 
that delicate regard for others' feelings so 
characteristic of economic writers, that he 
" could find his opponents in arguments, 
but not in brains " : without hinting at the 
possibility of any personal application, I 
may yet be pardoned, perhaps, for quoting 
this Johnsonian reminiscence in connec- 
tion with the palpable misconceptions of 
'' Orthodox " doctrines sometimes shown 
by critics of those doctrines. It is not a 
flattering commentary upon human cre- 
dulity that some people really seem to 
think that the Eno-Hsh economists start 



48 The Present Co7iditio7i of 

with a single assumption — men desire 
wealth — and build up the whole science on 
that alone. "In abstract political econ- 
omy," says' Mr. H. D. Lloyd, "wealth is 
the subject, desire of wealth the motive, 
competition the regulator, supply and de- 
mand the law, freedom of contract the 
condition, and equalization of rent, wages, 
other prices, and profits the result." Yes, 
but every " abstract " economist knows 
that " desire of wealth " is frequently not 
the only motive ; that competition is some- 
times wanting, and therefore cannot " reg- 
ulate " ; that supply and demand is not 
" the law," but a law ; that the condition 
of " freedom of contract " is often not real- 
ized ; and that in all these cases the " re- 
sult " will be affected accordingly. 

One of the most notable contributions 
to economics in recent years is Mr. J. K. 
Ingram's article on political economy in 
the last edition of the " Encyclopaedia 
Britannica " ; and yet it would seem as if 
— let us euphemize and call it inadequacy 
of statement — could not further go than 

' Atlantic Monthly, vol. 1., p. 73. 



Economical Science. 49 

in the following characterization of English 
economics : " The value of most of the the- 
orems of the classical economics is a good 
deal attenuated by the habitual assump- 
tion that we are dealingf with ' economic 
men/ actuated by one principle only ; that 
custom, as against competition, has no ex- 
istence ; that there is no such thing as 
combination ; that there is equality of 
contract between the parties to each trans- 
action, and that there is a defined uni- 
versal rate of profit and wages in a com- 
munity, which implies that the capital 
embarked in any undertaking will pass at 
once to another in which larger profits are 
for the time to be made ; that a laborer, 
whatever his local ties of feeling, family, 
habit, or other engagements, will transfer 
himself immediately to any place where, 
or employment in which, for the time, 
larger wages are to be earned than those 
he had previously obtained ; and that 
both capitalists and laborers have a per- 
fect knowledge of the condition and the 
prospects of industry throughout the 
country, both in their own and other oc- 



50 The Present Condition of 

cupations." ' If other parts of Mr. In- 
gram's treatise did not show minute 
acquaintance with '' Orthodox " writings, 
one could hardly withhold the belief that 
Mr. Inofram's fondness for German eco- 
nomics had led him to neglect all that has 
been written in England on the subject in 
the last half century. Chapters, essays, 
whole volumes, indeed, have been written 
by English economists to prove the inva- 
lidity of these doctrines, and to point 
out the limitations with which such 
doctrines must be received : there is 
hardly one of the " habitual assump- 
tions " ascribed by Mr. Ingram to the 
classical economics that, in the sense 
in which he seems to understand them, 
has not been repudiated time and again 
and with all possible emphasis by English 
economists. 

Having now glanced at the method of 
the "Orthodox" economists, and having 
seen in that way the need of caution in 
taking at second hand the doctrines of the 

' " Encycl. Britannica," ninth edition, vol. xix., p. 375. 



Economical Science. 5 1 

English school, we are prepared more intel- 
ligently to discuss the merits of proposed 
substitutes. Some difficulty arises at the 
outset from the circumstance that not all 
historical economists are agreed as to the 
precise character of the new doctrines : 
not only is the economic house divided 
against itself, but even the resulting sections 
must needs be subdivided. On one point, 
to be sure, historical writers agree wonder- 
fully well — that is, in crying down the old 
economics and proclaiming the necessity 
of a radical change ; but when the exact 
nature of that change is defined, the stand- 
ards clash again. Indeed, the spirit of the 
new school seems to be rather negative 
than positive, rather iconoclastic than con- 
structive. The German and especially 
the English adherents of the new school, 
have devoted more time to the finding of 
weak points in the old system than to the 
establishment of sound principles in the 
new. Accordingly, we can, perhaps, best 
begin our exposition of the Historical 
school by considering their criticisms of 
the older economics. 



V. 

THE NEGATIVE SIDE OF THE NEW SCHOOL. 

One of the stock arofuments ag^ainst 
the " abstract " political economy — that it 
is exclusively deductive, and thus deals 
with theories rather than with facts — has 
already been disposed of in our statement 
of the English scientific method. This 
criticism is urged with great fervor by the 
new school ; but the attitude of that 
school, as regards the proper sphere of 
deduction in economic inquiry, is by no 
means fixed. In Germany some of the 
more extreme Historical writers— Schmol- 
ler and his school — allow deduction no 
place in their economic method : on the 
ground, presumably, that deduction is not 
required in the mere observation and reg- 
istration of economic events. The found- 
ers of the German school did not so 
lightly cast aside deduction, seeing with 
52 



Eco?iomical Science. 53 

Professor Cairnes that one might reason 
inductively " till the crack of doom with- 
out arriving at any conclusion of the 
slightest value," ' So, too, Wagner and 
other contemporary economists in Ger- 
many protest against the purely inductive 
method, affirming that economists are 
something more than mere annalists, and 
that economic theory is a thing quite dis- 
tinct from economic history.^ 

The English Historical economists ap- 
parently do not quite agree with either 

' " Logical Method," p. 65. 

'^ There is a course of study in Harvard College — Political 
Economy IV. or, ' ' The economic history of Europe and 
America since the Seven Years' war " — that stands on the 
border-line between political economy and history, and that 
illustrates well the difference between economic history and 
economic theory. This course traces the economic effects of 
those great industrial and political movements that have so 
profoundly influenced, in the last 125 years, the production 
and the distribution of wealth — the invention of textile 
machinery, the applications of steam, the American and 
French Revolutions, the new discoveries of gold, the civil 
war of '61-5, the political reorganization of Germany, and so 
forth. Some of these subjects can be fully understood only 
by a person familiar with economic science ; in the main, 
however, the study is historical, and economic history is so 
far divorced from economic theory that the course is open to 
students who have made no previous study of political 
economy. 



54 The Present Co?idition of 

branch of their German colleagues. Cliffe 
Leslie devoted an essay ' to the elabora- 
tion of the thesis that the " economic world 
is an unknown world," and that, accord- 
ingly, political economy has not yet 
reached, in its scientific development, the 
deductive stage. Mr. Ingram, also, looks 
askance at deduction, declaring that we 
cannot '' assume as universal premises the 
convenient formulas that have been hab- 
itually employed, such as that all men de- 
sire wealth." In his view, however, the 
economic world is not so completely un- 
known as to exclude all use of deduction, 
since he adds : " Whilst eliminating all 
premature assumptions, we shall use the 
ascertained truths respecting human na- 
ture as guides in the inquiry and aids 
toward the interpretation of facts." ^ This 
resolve commands an easy approval : and 
why are not those " convenient formulas 
habitually employed" just such "ascer- 
tained truths respecting human nature " ? 
If the assumption that all men desire 

' Fortnightly Review, vol. xxxi., p. 934. 
' " Encycl. Britan.," etc., p. 400. 



Economical Science. 55 

wealth is '' premature," we may hope that 
all future premises of the science will be 
equally precocious in developing. 

Thus, when our historical critics ring 
the various changes of this *' exclusively- 
deductive " argument, the impulse is irre- 
sistible to make a casual remark about 
people who live in glass houses ; but the 
English school need not resort to the ttt 
quoqite argument. The fact is, that the 
English method, so far from being exclu- 
sively deductive, is constantly and neces- 
sarily inductive, and is avowedly crude 
and wholly insufficient without that at- 
tribute. Such is the theory ; and the prac- 
tice of leading English economists has 
been in perfect accord with the theory. 
As for Adam Smith, Hildebrand and 
other Historical authors claim him for 
their own ; and whoever has turned the 
fact-laden pages of the "■ Wealth of Na- 
tions" will never charge the Scotch pro- 
fessor with having favored unduly any one 
logical process. Malthus's work was about 
five parts historic to one part economic, 
and induction was summoned at every step 



56 The Present Condition of 

to clinch the deductive argument. At the 
present time, surely, Wall Street and the 
Bourse do not predispose men to favor 
theorizing, and probably in Ricardo's day 
the Stock Exchange tended just as little 
to make men "dreamers of dreams and 
spinners of abstract fancies." ' Without 
going through the chapter we may say, 
generally, that the English economists 
have followed the example set by their 
Scotch progenitor, and have ever regarded 
a theory inadequately supported by facts 
as a much worse predicament than facts 
uninterpreted by a theory. When Mr. 

' Still, Ricardo, though a successful man of business, and 
thus not likely to be over-fond of abstract speculation, has 
probably more than any other English economist provoked 
this charge against the " Orthodox" economics of undue atten- 
tion to theories. Ricardo's method is severely scientific ; the 
reasoning is close, and much is left for the reader to get be- 
tween the lines. Ricardo himself averred that not more than 
five and twenty persons understood his book ; and even his 
translators are not to be included in that chosen circle. 
Bagehot speaks of the ' ' anxious penetration with which 
Ricardo follows out rarefied minutiae, "and even this highly 
charged statement does not adequately describe the Ricardian 
tendency to subtilize. Even so, Jevons goes too far in saying 
that Ricardo shunted the car of economic science on to the 
wrong track ; at any rate. Mill and Cairnes have switched 
the car back again. 



Economical Science. 57 

Bagehot calls the German method in dis- 
paragement an "all-case" method, Mr. 
Leslie retorts that a " no-case " method is 
worse. This rejoinder is more remarkable 
for its truth than for its pertinency, since 
the English method is far from a " no- 
case " method, and would be aptly de- 
scribed (if we may torture the mother- 
tongue a little more) as the " enough- 
case " method. " Rapidity and daring in 
deduction," says Ingram, "may be the 
greatest of dangers, if they are divorced 
from a wide and balanced appreciation of 
facts " : the method of the English econo- 
mists contemplates the use of a sufficient 
number of cases to prevent any such sep- 
aration of fact and theory. 

Among the shortcomings of economists 
we noticed ^ a tendency to " state their 
conclusions in too absolute a form " — to 
conceive of their principles as universal 
and immutable truths : and this tendency 
has been magnified into a positive trans- 
gression by the economists of the new 
school. At the Adam Smith centenary 

' Ante, p. 41. 



58 The Present Condition of 

dinner, before referred to in these pages, 
Mr. Lowe (now Lord Sherbrooke) made 
a somewhat unfortunate remark to the ef- 
fect that poHtical economy had about fin- 
ished its work. This remark was simply 
pounced upon by the Historical economists, 
and has been rolled under their tongues 
ever since as a sweet morsel for criticism. 
We shall see later how much political 
economy has still before itself : and we 
mention this incident here only as a 
marked example of the tendency to re- 
gard the teachings of economics as truths 
for all time. Whether or not all things, 
as the old Greek philosopher declared, are 
relative, it is certain that some of the the- 
ories and very many of the applications of 
political economy are strictly contingent. 
From the way in which the economists of 
the new school have accentuated this 
truth one might suppose that the discovery 
was original with them. They are con- 
stantly assuring us, with the emphasis and 
the iteration appropriate to the exposition 
of a Qfreat scientific achievement, that 
economics is not a body of changeless 



Econo7nical Science. 59 

laws — nay, according to some historical 
authors, is not a body of laws at all.' The 
conclusions of former economists (con- 
tinue the critics) may have been valid 
when first drawn, but such conclusions are 
useless for the practical purposes of the 
statesmen of to-day. Each nation, as well 
as each epoch, has its own political econ- 
omy quite distinct from that of every other 
nation and every other age. 

This is what the critics say ; and, strange- 
ly enough, this is what the criticised say, 
also : only the latter do not say it so loud- 
ly, and do not think the statement of such 
importance that they must needs have it 
for preface, and text, and appendix. Still, 

* " Political economy is not a body of natural laws, . , . 
but an assemblage of speculations and doctrines " (Clifle 
Leslie, " Essays in Political and Moral Philosophy," p. 148). 
Dr. Edwin Seligman, also, reproaches the English school for 
the " pretence of having discovered economic laws." This 
offence would seem not to include all the crimes in the deca- 
logue, and probably the English writers would not hesitate to 
own the soft impeachment. At any rate they sin in good 
company, since Mr. Ingram criticises the German school for 
denying the existence of economic laws. For an admirable 
statement of the sense in which there are economic laws, see 
Ingram, " Encyc. Br.," etc., p. 392. Cf. Cairnes, "Essays 
in Political Economy, Theoretical and Applied," pp. 254, 255. 



6o The Present Condi tio7i of 

English economists have not deceived 
themselves in this respect ; they have rec- 
ognized the limitations of their subject, 
and have been o-lad to believe that their 
science is infinitely perfectible. Before 
taking up the subject of distribution, Mill 
notices ' the fact that the laws and the 
conditions of that subject differ from those 
of the production of wealth in being more 
arbitrary, and, therefore, less general. 
The laws of the production of wealth (he 
says) are like ph3Asical truths, having noth- 
ing optional in them ; but the distribution 
of wealth is a matter of human institution 
solely. Depending thus on the laws and 
customs of society, the principles underly- 
ing the distribution of wealth will vary as 
laws and customs vary. In the same way 
Mr. Bagehot devotes an essay to pointing 
out the limitations of economic truths, and 
declares that economics is only a " conve- 
nient series of deductions from assumed 
axioms which are never quite true, which 
in many times and countries would be 

' " Principles of Political Economy " (Laughlin's edition), 
P- 155- 



Economical Science. 6i 

utterly untrue, but which are sufficiently 
near to the conditions of the modern world 
to make it useful to consider them by 
themselves." 

In taking this view of their subject, 
the English economists have done only 
what was strictly required by the nature 
of their logical method. So far as altered 
political conditions, or new industrial sys- 
tems, or improved productive processes, 
or shifting social relations, or any thing 
else affects the production and the distri- 
bution of wealth, so far must the science 
be recast by the insertion of new data and 
the correction — perhaps the abandonment 
— of old premises : and so far forth will 
the economist regard his conclusions as 
provisional and his laws as transitory ; to 
this extent he will distrust the teachings 
of the past, and will agree with Dr. Ely 
that the '' political economy of to-day is 
not that of to-morrow." In one way, in- 
deed, economics is the very Penelope of 
sciences, plying its tasks over and over 
again, as the march of human affairs un- 
does the work of the past. 



'62 TJie Present Condition of 

But we must not attach too great im- 
portance to this aspect of poHtical econ- 
omy. Mr. Cairnes somewhat impatiently 
asks,' " Will people never understand that 
a 'law' of political economy is a 'law' 
in no other sense than the law of gravita- 
tion ? " And, in fact, so long as the prem- 
ises from which the economist reasons are 
true, so long must the logical conclusion 
follow as immutably as the sequence of 
cause and effect in the case of any purely 
physical law. Morever, the differences in 
the relative importance of the premises of 
the science are, for the most part, rather 
theoretical than actual. No one can dis- 
pute Dr. Seligman's assertion that the ex- 
planations of phenomena are inextricably 
interwoven with the institutions of the 
period : but the great "■ institutions of the 
period" — private property, capital, credit, 
the relation of employer and employee, and 
so on — are the same the world over. It is 
conceivable, of course,, that these economic 
arrangements of mankind may change ; 
that the institution of private property may 

' " Leading Principles," p. iii. 



Econontical Science. 63 

give way to a communistic regime ; that 
the relation of employer and employee 
may be replaced by a system of co-opera- 
tive industry. But these, after all, are re- 
mote contingencies, and do not much 
affect the practical question. The great 
and fundamental laws of economics are es- 
sentially the same for all the countries and 
all the times with which economists a.re 
concerned : and in these days of ever-im- 
proving communications, when local pecu- 
liarities are fast fading away, even the less 
important principles of the science will 
not need essential modification in dif- 
ferent places. In short, both the funda- 
mental and the incidental premises of 
economics are, and can hardly fail to 
remain, cosmopolitan : " There is no 
more a French or German or American 
political economy or political science than 
there is a German or French or American 
science of astronomy or chemistry." ' 

"Only through the principle of compe- 
tition has political economy any preten- 

' Lalor's " Cyclopsedia of Political Science," preface. 



64 IJie Present Condition of 

sion to the character of a science," says'" 
Mill ; and English economists in general 
have regarded competition as bearing to 
their science the same fundamental rela- 
tion that, for example, the law of gravita- 
tion bears to the science of astronomy. 
Historical economists, however, attach 
less importance to this factor of industry, 
and declare that many flaws in the current 
doctrines are due to an exclusive depend- 
ence upon competition as the solvent in 
which all economic problems may be re-^ 
solved. Competition (runs the criticism) 
is of the first importance to the econo- 
mist ; but it cannot, by itself, explain some 
of the most striking phenomena of indus- 
trial life ; " by neglecting the other forces 
[ranging] from sympathy to monopoly, 
the abstract political economist deduces 
principles that fit no realities, and has to 
neglect those realities for which we need 
principles most. When combination comes 
in at the door, this political economy of 
competition flies out of the window."^ 

' " Principles of Political Economy " (Laughlin's edit.),, 
p. 175- 

^ Atlantic Monthly, vol. 1., p. 75 (H. D. IJoyd). 



Economical Scieizce. 65 

In these days of millionaires and multi- 
millionaires combination frequently does 
cross the threshold ; and in this emergency 
"the political economy of competition" 
cannot do better than take itself off at 
short notice : but the English political 
economy, if true to its logical method, will 
not remain, under these conditions, a po- 
litical economy of competition. H istorical 
economists may well emphasize the mod- 
ern drift toward an era of custom and com- 
bination. Unquestionably, the current of 
industrial life to-day sets strongly in this 
direction. Now, more than when " Locks- 
ley Hall " was written, does "the individ- 
ual wither." On every side giant monop- 
olies, trade coalitions, and industrial 
leagues of all kinds have come into being : 
and the inquiries, how far this movement 
is a legitimate and useful reorganization, 
making more effective, as parts of a gen- 
eral system, detached and inefficient indus- 
trial bodies ; and how far, on the other 
hand, the movement is unlawful as violat- 
ing the rights of consumers, — these are 
questions that call for the nicest discrimi- 



66 The Present Condition of 

nation on the part of economist and states- 
man. So far as Historical writers address 
themselves to these questions, or sound 
the note of alarm, so far they acquit them- 
selves well, and make no mistake. But it 
is a mistake to suppose that this state of 
things is beyond the reach of the English 
economics : this is just the contingency 
contemplated by Mr. Cairnes, when he 
says ' : '' Many subordinate influences will 
intervene to disturb, and occasionally to 
reverse, the operation of the more power- 
ful principles." It is obvious that the ef- 
fect of monopoly will be to make void 
any deductions that derive their cogency 
from the supposed existence of competi- 
tion. In the presence of this new power 
political economy must recast its premises, 
and adapt itself to the changed conditions. 
This is required by the logical method 
of the English economics ; and this is, in 
fact, what leading English economists have 
done. One hundred years ago the possi- 
bilities of combination were not so great 
as now, and the economist could more 

' " Logical Method," p. 42. 



Economical Scieiice. 67 

safely leave it out of account ; but Adam 
Smith noticed the tendency even at that 
time : *' People of the same trade hardly 
ever meet together, even for merriment 
and diversion, but the conversation ends 
in a conspiracy against the public." ' Mill, 
too, recognized the imperfect action of 
competition, and devoted a chapter ^ to an 
exposition of these imperfections ; at the 
same time warning the reader that " these 
observations [about the occasional absence 
of competition] must be received as a gen- 
eral correction to be applied whenever 
relevant, whether expressly mentioned or 
not, to the conclusions contained in the 
subsequent portions of this treatise." ^ One 
of the most notable advances of economic 
science in recent years — Cairnes's doctrine 
of non-competing groups — starts from the 
recognition of certain limitations on the 

^ Quoted by H. D. Lloyd, in North Ainerican Review, vol. 
cxxxviii., p. 565. Whoever w^ould learn the extent to which 
combination has already taken place in our leading pursuits 
should turn to this article of Mr. Lloyd's on the " Lords of 
Industry." 

^ " Principles of Political Economy," Book II., chap. iv. 

^ " Principles," etc. (Laughlin's edition), p. 177. 



'■68 The Preseiit Co7idition of 

.action of competition. Not to multiply 
examples unduly, suffice it to say that 
English economics, in theory and in prac- 
tice alike, is opposed to any thing like an 
exclusive dependence upon competition. 

Another criticism persistently urged by 
Historical writers against English econom- 
ics relates to the attitude of the English 
school toward the doctrine of laissez-faire. 
This doctrine, it is argued, has been proved 
an unsafe principle for the guidance of the 
statesman, has not been consistently car- 
ried out even in England, and is clearly 
impotent in the presence of the labor 
question, railroad supervision, and other 
modern problems. Now, all this may be 
or may not be true ; without presuming 
to pass judgment upon that, and without 
attempting any defence of the doctrine of 
non-interference, we would simply direct 
attention here to the fact that criticisms 
of this sort aimed at the English school 
are plainly beside the point— supposing 
the point to be the one usual in such cases, 
that is, the condemnation of English eco- 



Economical Science. 69 

nomics as a science of the laws of wealth. 
Economics, purely as such, has nothing 
to do with theories about governmental 
functions ; and English economists, as 
such, are not bulwarked in favor of laissez- 
faire or any other '* handy rule of prac- 
tice." ' It is conceivable, of course, — even 
reasonable to suppose, — that an economist 
will be led, by the teachings of his science, 
to have a definite opinion about the ad- 
visability of governmental interference. 
Adam Smith, for example, viewing the 
commercial legislation of the eighteenth 
century in the light afforded by the laws 
of political economy, made a sweeping 
attack upon the prevailing theories, and 
gave the doctrine of individual sufficiency 
a fundamental place in his system of ap- 
plied economics. But the industrial world 
has changed vastly since 1776, and in a 
way that affects the consideration of this 
question. While Adam Smith was laying 

' This is the phrase by which Cairnes describes the doctrine 
of laissez-faire (" Essays, Theoretical and Applied, "p. 244), 
In the same way Professor F. W. Taussig calls the doctrine a 
"rough rule of thumb" (" Science Economic Discussion," 
P- 35). 



70 The Present Coiiditio7i of 

the deep and broad foundation upon which 
the economic structure has risen to its 
present imposing dimensions, Arkwright 
and Hargreaves were making possible the 
textile industries of to-day. During the 
same year James Watt was beginning to 
realize the marvellous possibilities of his 
discovery ; and the sale of the first steam- 
engine synchronizes with the publication 
of the " Wealth of Nations." About the 
same time, too, experiments were going 
on at Coalbrookdale and at other mining 
centres in England, that were to pave the 
way for the modern iron industry. In 
short, the industrial world, as it exists to- 
day, with all its dangerous possibilities, 
was just shaping itself, when economics 
sprung forth, Athena-like, in the " Wealth 
of Nations." Under the changed condi- 
tions of the modern world, perhaps the 
doctrine of the economic passivity of the 
state may be pushed too far. The factory 
system., carrying with it a minute division 
of labor unfavorable to intellectual vieor 
or to mental development, has succeeded 
the cottage industries of a century ago ; 



Economical Science. 71 

gigantic, spongily absorbent transporta- 
tion companies, in vital connection with 
the industrial life of the community, have 
no prototype in the economic world of 
one hundred years ago ; sin-breeding and 
health-sapping coagulations of humanity, 
constantly menacing the political welfare 
of our cities, have taken the place of the 
idyllic group formed by the weaver and 
his children about the household loom ; a 
well-equipped and highly-organized army 
of laborers, exalted with conquest and 
more aggressive daily, has succeeded the 
servile workman, a legal industrial slave, 
cringrinp- before his overseer. 

Plainly enough, there are more things 
now than in i 776 that cannot safely be left 
to private initiative : and the recognition 
of this fact is quite consistent with the en- 
dorsement of Adam Smith's political econ- 
omy. We shall have to recur to this mat- 
ter shortly in connection with another 
aspect of the Historical school of econ- 
omists : the thing to be noted here is that 
the doctrine of laissez-faire forms no essen- 
tial part of the English economics, and 



72 The Frese?it Conditio7i of 

that, accordingly, criticisms deriving their 
force from the identification of the Eng- 
lish school with one or another view as to 
governmental interference are valueless as 
criticisms, because aside from the purpose 
in hand. 

The foregoing are, perhaps, the leading 
objections raised by the new school against 
the old economics. But some Historical 
writers seem to think that no good thing 
can come out of English economics ; and 
we have, accordingly, in addition to these 
fundamental strictures, a choice assortment 
of minor criticisms so varied and compre- 
hensive in character that their validity 
would imply the complete obliteration of 
the old political economy. Moreover, not 
content with crying down what has been 
done. Historical writers denounce the old 
school for what has not been done ; and it 
is a question with some critics whether 
these sins of omission do not overtop in 
iniquity even the positive transgressions 
of the older economics.' But time would 

' Cliffe Leslie, for example, calls the English school to ac- 



Economical Science. 73 

fail the writer, as patience would fail the 
reader, if the attempt should be made to 
portray in full this negative side of the new 
economics. Without delaying longer, 
therefore, on this attitude of the Histori- 
cal school, let us turn to the positive side 
of that school, — let us consider the new 
principles and the new conceptions that 
are to take the place of the older doctrines. 

count for having "neglected the important department of 
the consumption of wealth " (" Essays in Political and Moral 
Philosophy," p. 155) ; though one is at a loss to understand 
what the English school could put into that department be- 
yond an historical account of the course that consumption 
usually takes in growing communities. It is a great pity, by 
the way, that Mr. Leslie did not supply some of the many de- 
ficiencies that he found in the current doctrines. If he had 
replaced a small part of what he attempted to tear down, the 
economic edifice would now be a marvel of architectural ele- 
gance. A writer in the Atlantic Monthly (Sept., 1882) la- 
ments Mr. Leslie's " captious and quibbling" criticisms, and, 
evidently believing in the theory that temper is a mere 
matter of digestion, ascribes Mr. Leslie's conduct to ill-health. 



VI. 

THE POSITIVE SIDE OF THE NEW SCHOOL. 

The chief characteristic of the new 
school is indicated by one of its names, 
and consists in the great prominence given 
to historical investigration. The fact that 
" a people is not merely the mass of indi- 
viduals now living " is deemed by Roscher 
a point of pivotal importance in econom- 
ics ; and Hildebrand lays equal stress on 
the circumstance that "man, as a member 
of society, is a child of civilization and a 
product of history" : while both Roscher 
and Hildebrand, as well as Historical econ- 
omists in general, infer from these facts 
that the study and comparison of history, 
especially economic history, should be the 
chief business of economists. 

Some one has said that history, so far 
as it is a mere chronicle of events, is no 
more a science than a city directory : and 

74 



Economical Science. y5 

we have already noticed ' the utter Inade- 
quacy of one " historical method " In eco- 
nomics ; that, namely, which is adopted 
by Schmoller, and which resolves Itself 
Into a mere recording of economic events 
and accumulation of statistical knowledge. 
Such work is, of course, a part — and a 
very essential part — of any scientific meth- 
od of studying the phenomena of wealth ; 
but it Is difficult to see that such work is 
anything more than a part of a method. 
To study economics with sole reliance 
upon this means would be like studying 
astronomy by simply recording celestial 
phenomena without attempting to inter- 
pret them by the aid of the laws of gravi- 
tation and of motion. 

Dismissing, then, this " historical meth- 
od " — the more readily because It is re- 
pudiated by the majority of the new school 
— we come to the less extreme method, 
which, admitting the necessity of a philo- 
sophic analysis of the motives and a sys- 
tematic formulation of the principles that 
underlie the economic world, deems mere 

' Ante, pp. 53, 54. 



76 TJie Present Condition of 

historical research insufficient, and supple- 
ments this by deductive reasoning. Wag- 
ner, perhaps, represents as well as any 
one this more rational conception of an 
historical method in economics ; and this 
is the way that he describes the proper 
relation between induction and deduction 
in economic inquiry : " Induction must 
always be brought to aid in making more 
accurate the approximate conclusions 
which have been reached by deduction, 
and which, as a rule, can be reached by 
deduction alone. . . . These, then, 
are the two methods : on the one hand, 
deduction from psychological motives, — 
first and foremost, deduction from the 
motive of individual advantage, then from 
the other motives ; on the other hand, in- 
duction from history, from statistics, and 
from the less exact and less certain, yet 
indispensable, process of common observa- 
tion and experience." ' 

Professor Cairnes himself could hardly 
have made, in the same compass, a more 

' Translated in the Quarterly Journal of ILconomics, No. I, 
p. 124. 



Economical Science. j-j- 

accurate statement of the English method 
than that just quoted from Wagner ; and 
whether or not the average economist of 
the new school would accept Wagner's 
method in its entirety, we must contend 
that the difference between the old and 
the new school, as regards the importance 
of historical investigation, is a difference 
of degree only. The old economics, to be 
sure, shrinks from certain excesses of the 
new method in the use of history. Eng- 
lish economists, for example, have little 
sympathy with the idea that they should 
go on for several years to come, piling up 
historic material, before attempting to 
give this material scientific form. So, too, 
the old school cannot quite agree with 
Roscher that " all the peoples from whom 
we can learn any thing must be studied 
and compared from the economic point of 
view, especially the ancient peoples, whose 
development lies before us in its totality." 
Say conjectured that if Carthage, with its 
highly developed commerce, had gained 
the upper hand in the struggle with Rome, 
economics might have received from the 



78 The Present Co7idition of 

ancient world the same impetus that other 
branches of knowledge owe to the Renais- 
sance. As it is, however, antiquity has 
contributed little or nothing- to economics ; 
and the utterly unlike conditions of the 
ancient and the modern economic world 
make one question the wisdom of Ros- 
cher's view/ 

From these and a few other extrava- 
gances of the Historical method, Eng- 
lish economists hold themselves aloof. 
Nevertheless, the English method pre- 
supposes the constant use of history, and 
might indeed, without any straining of 
language, be called " historical." When 
the English economist has drawn certain 
conclusions from his time-tested premises, 
he proceeds to complete his work by con- 
fronting these conclusions with the actual 
course of affairs as shown by historic in- 
vestigation : and it is only after such con- 
clusions have been thus confirmed or cor- 

' In an excellent article on the history of economic thought 
Dr. Edwin R. A. Seligman shows that economics among the 
ancients was impossible, because "the whole environment 
was of a nature to preclude speculation of this kind." See 
'" Science Economic Discussion," pp. 4-7. 



Economical Science. 79 

rected — possibly confuted — that the Eng- 
hsh method has been fully carried out. 

In the case of many practical problems 
in economics, where the lack of trustworthy 
data throws doubt upon the deductive 
conclusions, this historical part of the pro- 
cess is by far the more important ; and the 
English economists have shown their ap- 
preciation of this fact by the way in which 
they have taken such problems in hand. 
Adam Smith Is praised on all sides for his 
efificient use of history in clinching de- 
ductive arguments, and Cliffe Leslie goes 
so far as to claim the Glasgow professor 
as an Historical economist. Mai thus ar- 
rived at his famous doctrine by speculative 
reasoning ; but he felt it necessary to ran- 
sack the earth for historic illustrations 
and confirmations of his theory. English 
economics attacks the land-holding prob- 
lem first by the way of deduction ; but 
Mill and Fawcett and other English 
economists were content with nothing less 
than an exhaustive study of the French 
and Belgian peasantry. A priori econom- 
ics easily infers, from a premise supplied 



8o The Present Condition of 

by the history of labor-saving machinery,, 
that the condition of the laborer has been 
much improved in the last half century ; 
but a Giffen and an Edward Atkinson 
were needed to complete the demonstra- 
tion. English political economy, as might 
be expected from the character of its logi- 
cal method, abounds in just such exam- 
ples of combined historic and speculative 
treatment of economic questions. 

As regards, then, the solution of partic- 
ular problems in economics, there is no 
doubt as to the usefulness of an historical 
method — that is, a method in which his- 
torical Investigation shall play an import- 
ant part. Yet even here it is only a part 
of the process that history furnishes ; and 
we must still resort to those fundamental 
premises of the science that are applicable 
to a vast range of problems, and that guide 
our steps throughout the domain of the 
economic world. As for these fundament- 
al premises, the more important of them 
may be framed without the aid of history ; 
and the others depend upon historical re- 
search only as most economic conclusions 



Economical Science. 8i 

depend upon such research — that is, in 
the way of confirmation and possible 
correction. 

Professor Richmond M. Smith, however, 
contends that the historical method is cap- 
able by itself of formulating general prin- 
ciples to which particular problems may be 
referred. From the history of the double 
standard, for example. Historical econo- 
mists derive a general principle commonly 
known as Gresham's law. But the Eng- 
lish economists reach the same principle 
by a simple mental process ; though they 
welcome such work as Professor Laugh- 
lin's study of bimetallism as a striking and 
necessary confirmation of their deductive 
conclusions. Another example that Pro- 
fessor Smith gives to illustrate the way in 
which history furnishes economics with 
general principies must be regarded as 
somewhat unfortunate : " From the pros- 
perity of England [we reason] to the 
theory of free-trade." ' 

' " Science Economic Discussion," p. I13. To what, 
then, do they reason from the prosperity of this country or 
from the pre-eminence of England fifty years ago? The izX- 

\a.cy oi" post hoc e7-go propter hoc" is nowhere better illustrated 



82 The P7'esent Condition of 

Even if we admit that historical investi- 
gation, when carried far enough and inter- 

than in this matter of protection and free trade. In former 
times protectionists pointed to the example of England in the 
same conclusively exultant manner with which free-traders 
to-day accompany the same act. An extreme example of 
this style of argument is afTorded by those who ascribe the 
backward condition of Turkey to the commercial policy 
adopted by that country— an exhibition of " sweet reason- 
ableness " that is, to say the least of it, sufficiently smile-stir- 
ring. Hardly less absurd, however, are some interpretations 
of history to which the tortuous course of our own tariff legis- 
lation has given rise. The commercial depression of the 
years 1837-41 is perfectly explained in Carey's mind by the 
"compromise tariff " act of 1833, although the operation of 
this act did not bring about any considerable reduction in the 
tariff charges until the elements of prosperity in the business 
world were at hand. Carey had a most curious incapacity 
for impartial reasoning, and the history that he read was 
highly colored by his pre-conceived opinions. We need not 
wonder, then, at his interpretation of these years ; the re- 
markable thing is that he should have been followed in this 
regard by later writers — by Stebbins and Thompson and 
Bolles. On the other hand, free-traders, it must be said, 
have shown as little reason in ascribing to the tarif? act of 
1846 the general prosperity of this country in the following 
years. 

All attempts of this sort to connect general business condi- 
tions with a particular tariff policy must be made with the 
greatest care. Of course, the commercial policy adopted by 
a great nation cannot fail to have important consequences in 
the industrial history of that nation : but scores of other 
things have as much and more importance : and to ascribe 
the general resultant effect to a single one of the contributing 
causes is to violate the commonest rules of logic. 



Ecojiomical Science. 83 

preted with the utmost caution, may lead 
to generaHzations of sufficient importance 
to constitute subordinate premises avail- 
able for economic reasoning, the fact will 
remain that the chief resource of the 
economist lies in the recognition of those 
ever-relevant principles that so largely 
concern the production and the distribu- 
tion of wealth : and these classical " men- 
tal principles and physical conditions" are, 
as we have said, beyond the reach of the 
purely historical method. 

How essential these premises are in 
economic reasoning may be seen from the 
practice of the "inductive" economists 
themselves : for, however much Historical 
writers have derided " a priori reasoning," 
and have deprecated the use of " premature 
assumptions," the same writers have con- 
stantly used this identical reasoning, and 
have not scrupled to avail themselves, 
wherever possible, of these same assump- 
tions with a serene disregfard of their im- 
maturity. Indeed, the latest statement of 
the new methods distinctly appropriates 
this feature of the old economics : "' There 



84 The Present Cojtdition of 

is absolutely nothing in the new method," 
says ' Richmond M. Smith, " to prevent 
our accepting and using any facts of the 
human mind or of nature which will aid us 
in determining how men act in economic 
affairs " : and, to be sure, there is nothing 
to. prevent this — except the use of the 
word " new." 

We found just now Adam Smith, Mal- 
thus. Mill, and the English economists 
generally making a constant use of his- 
tory ; and the writers of the Historical 
school have sometimes "" used the examples 
thus afforded to prove the excellence of 
the new method. No one can deny that 
this is one way of looking at the question ; 
but most people would conclude, rather, 
that the new method, so far as its histori- 
cal aspect is concerned, is not new at all — 
unless increased emphasis be deemed a 
sufficient title to novelty. Whether or 
not this accentuation of the importance of 

' "Science Economic Discussion," p. 113. 

"^ Cf. Cliffe Leslie in numerous instances, Stanley Jevons's 
speech at the Smith centenary dinner, and Professor Smith's 
article, " Methods of Investigation," etc., in the brochure so 
■.often referred to here, " Science Economic Discussion." 



Economical Science. 85 

historical research in economics was called 
for by the practice of the English econo- 
mists is a question that need not detain 
us here. It may well be that this note of 
warning was needed to mortify the taste 
of the average economist for abstract 
speculation ; and, so far as this is so, the 
new movement must be credited with 
good work. The fact remains, however, 
that we have here not a radical departure 
from old methods, but only a criticism — 
a notable and necessary criticism, if you 
will — of existing methods ; there is no 
sufficient basis here for a new school. 

In some other respects, however, the 
divergence between the old and the new 
view of economic methods and aims is 
more marked ; and we have a case in 
point in that article of the new faith which 
insists upon the perfect mutuality of the 
social sciences, and which, accordingly, 
merges political economy in the larger 
science of sociology. Here again the 
two schools go hand in hand for a part 
of the way ; and we shall do well to 



86 The Present Condition of 

note the exact point at which they part 
company. 

That the general science of sociology is 
made up of several closely interrelated 
parts, of which economics is one, has 
never been disputed by the English econ- 
omists. On the contrary, the latter have 
emphasized this interdependence of the 
social sciences, and have always main- 
tained that the application of economic 
truths presupposes the proper correlation 
of those truths with the teachings of juris- 
prudence and politics and ethics. What 
English economists venture to deny is, 
that certain elements in this aggregate 
social condition- — the elements with which 
economics has to do — are not best con- 
sidered by themselves apart from the 
other forms of social speculation. So vast 
is the field of general sociology, so varied 
are the interests appurtenant to different 
parts of that field, so diverse are the 
aspects under which the same facts of 
society must be viewed in different lines 
of social study — political, ethical, jural, 
economic, — so contradistinct, in fine, are 



Economical Science. 87 

the various branches of social inquiry, that 
the EngHsh economists count it a distinct 
gain to isolate as completely as possible 
the class of phenomena with which they 
are concerned, and view the introduction 
of extra-economic considerations as a 
gratuitous complication of their problems. 
Not so, however, the latter-day econo- 
mists. So far as sociology is concerned, 
they do not hesitate to "drive the sciences 
abreast," nor do they despair of "reducing 
all knowledge into harmony." English 
economists, as we have seen, admit — or, 
rather, maintain — that the social sciences 
are tightly dovetailed together, and that, 
accordingly, the correct interpretation of 
economic truths implies a certain correla- 
tion with associated facts. But Historical 
economists go a step beyond this and de- 
clare that the connection between eco- 
nomics and the related sciences is simply 
umbilical. Each branch of social science, 
they say, is grafted into the general socio- 
logical trunk beyond the possibility of 
severance ; and, more especially, the facts 
of wealth — the various phenomena con- 



88 The Present Condition of 

noted in the word economic — are so in- 
separably intertwined around moral and 
juristic facts, and economic laws are so 
rigidly conditioned by the other laws of 
man's social nature, that the discovery 
of sound principles is impossible with any 
method not based on this organic nature 
of the economic life. 

Stated in these general terms this argu- 
ment is not without a certain degree of 
plausibility ; and those who favor this 
view are careful not to forfeit their 
vantage-ground by descending into par- 
ticulars. Current explanations in eco- 
nomics, it is said, are weakened by the 
narrowness of the pedestal on which they 
rest ; and true explanations are possible 
only when the premises are co-extensive 
with the plane of social life ; but what 
particular doctrine of the current eco- 
nomics is so enfeebled, and what new 
explanation illustrates the better method 
— this part of the demonstration is less 
easy to find. 

The advantage in limiting the field of 
economics and the effectiveness of the 



Eco7winical Science. 89 

"Orthodox" way of attacking social prob- 
lems are shown by the whole history of 
pure and applied economics. A simple 
illustration will make the method clear. 
It is proposed to change the working-day 
from ten to eight hours ; the problem is 
to determine whether or not this change 
should be made. At the first blush there 
throng upon the mind a crowd of con- 
siderations based on different principles, 
of varying degrees of importance, and 
leading to opposite conclusions. The 
first thing to do, then, is to set in order 
this confused body of opinion, so that 
arguments looking in one direction may 
be weighed with those indicating a differ- 
ent conclusion ; and this end is reached 
by resolving the problem into its various 
elements and treating each of these 
separately. 

The question obviously has an eco- 
nomic side ; and we may first inquire 
what political economy has to say about 
the matter. The workman will produce 
less in eight hours than in ten — probably 
not so much as a fifth less, but certainly 



90 The Present Condition of 

somewhat less ; the average share of each 
consumer will be smaller ; the aprerepfate 
wealth of the country will increase less 
rapidly ; and capital will grow more 
slowly. Economics says this, and steps 
aside in favor of ethics. The latter finds 
in the added leisure of the laborer a chance 
for new pleasures (some of them noxious, 
no doubt), for needed recreation, and for 
intellectual and spiritual development. So 
far as the moral nature is concerned, the 
proposed change will, on the whole, make 
life better worth living for a large part of 
the community. After contributing so 
much to the solution of the problem the 
ethical philosopher gives way to the polit- 
ical philosopher or the statesman. The 
latter uses the data furnished by his pred- 
ecessors, weighs the comparative advan- 
tages in the two results — the accumula- 
tion of wealth on the one hand, and the 
growth of the civic virtues on the other — 
and makes a decision accordingly. 

Where is the error in this process, and 
where is the danger in separating thus the 
various parts of the problem ? Is it not 



Economical Science. 91 

true that the laborer will produce less in 
eight hours than in ten ; and why not, 
then, single out this fact, and be sure of 
so much, at least, in the general maze pre- 
sented by every social question ? Is it not 
equally clear that the ethical side of the 
case favors the proposed change ; and 
should we not, then, take this fact by it- 
self, and to that extent simplify the issue ? 
We may certainly plead the analogy of the 
physical sciences in defence of this view ; 
for the whole history of physics shows that 
progress has been made only by narrow- 
ing, in just this way, the field of investiga- 
tion. Admitting that the example of the 
physical sciences is against them, Histori- 
cal economists contend that the greater 
complexity of the social sciences differen- 
tiates the case. But how can this be so, 
in view of the fact that, even in the case 
of the physical sciences, the great reason 
for specialization is the confusion that 
would otherwise ensue ? If the social sci- 
ences are more complex, there would seem 
to be all the more reason for splitting up 
resultant phenomena into their various 



92 The Present Condition of 

elements, so that the effect of each force 
may be more accurately measured. 

" You have founded an entire science of 
political economy," says Ruskin ^ to the 
English economists, " on what you have 
stated to be the constant instinct of man 
— the desire to defraud his neighbor " : 
and Henry C. Carey, long before the His- 
torical school was thought of, charged eco- 
nomics with " having- made for itself a be- 
ing which it denominated man, from whose 
composition it excluded all those parts of 
man that are common to him and the an- 
gels, retaining carefully all those common 
to him and the beasts of the forest. " ' These 
passages strike a responsive chord in the 
teachings of the new economics ; for His- 
torical economists agree with Sissy-Jupein 
" Hard Times " that the first principle of 

^ Whoever has read the economic works of the great art- 
critic will agree with Bagehot that Ruskin had " a mind of 
contrary flexure, whose particular bent it is to contradict what 
others around them say." Even in this pun-discrediting age 
we may pardon a witty reviewer of Ruskin, who declared that, 
in view of the Latin proverb, " Unto This Last " would more 
properly have been called " Beyond His Last." 

' " Social Science " (McKean edition), p. 103. 



Economical Science. 93, 

political economy is the golden rule. That 
the ethical element should not predominate 
in economics is an idea at which their moral 
sense revolts ; and Emerson seems to them 
to have said something, when he declared 
that the " best political economy is the 
care and culture of men." 

From the fervent language of some 
critics one would infer that the attitude of 
the English school toward ethics implied 
a certain presumption of moral iniquity 
on the part of those who take the " Ortho- 
dox " view : but I suppose we need not 
linger over this phase of the question. 
As we have seen elsewhere, English econ- 
omists do not think of applying economic 
truths without first taking into account 
the moral aspects of the case ; and where 
the two considerations clash, English econ- 
omists never dream of making the moral 
element subservient to the economic. The 
sooner a boy begins to work, the more he 
will produce, and the greater will be the 
wealth of the country ; so that compulsory 
education for the young could hardly ex- 
ist, if pure economics were allowed to set- 



94 J^h,e Present Condition of 

tie the question. In a multitude of cases 
like this economic considerations have to 
give way to the higher issues involved. 

Thus, the English school does not over- 
look ethical considerations, but only keeps 
them in reserve, until they can be intro- 
duced without dano-er of vitiating- the re- 
suits of purely economic reasoning. This 
proposed " reunion of ethics with political 
economy " is really only another aspect of 
that side of the Historical school that we 
have just considered : and the same con- 
siderations that gave us pause before at- 
tempting to treat in the lump a hetero- 
geneous mass of social questions pluck us 
by the sleeve when we try to combine 
moral and economic interests within the 
limits of a single line of study. The two 
kinds of investigation are incompatible — 
from the nature of the case they cannot be 
combined. The various things concerned 
in the production and the distribution of 
wealth must be classified in one way for 
the purposes of economic investigation, in 
quite a different way for the purposes of 
ethical study. The famous divine, whose 



Economical Science. 95 

lieaven-inspired words transport a multi- 
tude of hearers every week, receives a 
salary determined by the same principle 
that regulates the pay of the prize-fighter. 
In this respect, then, economics must 
place these persons in the same category : 
and any method that changes this arrange- 
ment will, so far forth, result in error. 
The footpad wlio robs a man of money, 
and devotes the sum thus obtained to re- 
productive employment, '' saves," just as 
much as the poor seamstress who, at the 
expense of health and comfort, garners up 
the same amount from her pitiful stipend : 
that is, the word " saves " in economics 
has no moral connotation. Eng-Hsh econ- 
omists are held up to ridicule, because in 
their eyes "a pot of beer and a picture — 
a book of religion and a pack of cards — 
are equally objects of regard " : but why 
not, if the last phrase means only, " are 
equally objects of value " ? For certain 
purposes, — e. g., for the purposes of the 
economist in search of the law underlying 
the value of commodities — these various 
objects are " equally worthy of regard " ; 



96 77^1^ Present Condition of 

and any method of investigation that pro- 
ceeds on a different principle will only 
make poor ethics out of good economics. 
That a pot of beer and a pack of cards 
have value, is a fact : and to disregard 
facts or to do any thing other than accept 
and act upon them, is not the part of true 
science. To be sure, it is not always easy 
to do this : according to Professor Simon 
Newcomb, " one of the most difficult 
pieces of mental discipline is that of learn- 
ing to look upon facts simply as facts " ' ; 
but every scientist — above all, every social 
scientist — must acquire this discipline, and 
must use facts as he finds them, whether 
or not such as he would like them to be. 

We have already found the new econo- 
mists disclaiming belief in laissez-faire and 
criticising the English school for a sup- 
posed devotion to that doctrine ; and we 
come now to a positive principle of the 
new school that is correlative to this nega- 
tive feature — that idea of the economic 
function of the state that we embody in. 

' " Science Economic Discussion," p. 62. 



Economical Science. 97 

the phrase, " paternal government." We 
need not consider at length this aspect of 
the new economics ; for the application of 
economic truths is a matter quite distinct 
from the question of scientific method, and 
can hardly be made the basis of opposing 
schools of political economy. Just as the 
maxim of laissez-faire forms no part of 
pure economics, but is, as Professor Cairnes 
says, a " mere handy rule of practice, to- 
tally destitute of all scientific authority " ' ; 
so the opposite doctrine, with which the 
new economists identify themselves, is 
really no part of economic science, and 
would more properly characterize a school 
of politicians than a school of economists. 
Whether or not Historical economists are 
wise in calling for increased governmental 
interference is an interesting and fruitful 
inquiry ; but the scope of this essay forbids 
any extended discussion of the subject. 

' " Essays," etc., p. 244. In view of the danger that often 
lurks in short quotations, I may add that Professor Cairnes is 
by no means to be regarded as an advocate of state-control. 
He repudiates the scientific authority of laissez-faire j but he 
insists upon the great practical value of the doctrine as a guide 
for the statesman. 



98 The Present Condition of 

Dr. Seligman reminds ' us that the " prac- 
tical conclusions [of economics] must not 
be dissociated from the shifting necessities 
of the age " ; and probably not many peo- 
ple would deny that the " necessities of 
the age," as regards state intervention, 
have shifted in the course of the present 
century. How far this change will justify 
us in going is, however, a matter more 
open to doubt. Unquestionably, the spirit 
of the times would carry us a long way in 
the direction of orovernmental tutelag-e. 
This tendency is world-wide ; but the 
course of history in our own country has 
aggravated the tendency here in a peculiar 
way. The exigencies of the civil war led 
Congress to assume greater and greater 
authority ; and the drift of affairs during 
the period of reconstruction was in the 
same direction. Already we have reached 
the point at which the State takes upon 
itself the enforcement of sanitary regula- 
tions, a limited restraint of corporations, 
and a certain oversight of production and 
transportation. Even as I write, the law- 

" 'Science Economic Discussion," p. 22. 



Economical Science. 



99 



makers of Massachusetts are consideringr a 
measure by which the State is to arbitrate 
between the clashing interests of employer 
and employee ; and Congress is on the 
point of passing a bill that will give to the 
national government a more effective con- 
trol of commerce. 

There is, of course, nothing very por- 
tentous in all this ; but the elements of 
danger are present none the less. Some 
one has said that the groal toward which 
mankind has been struofo-line for the last 
two thousand years is that of personal free- 
dom ; and certainly one of the purposes 
running through the ages has been this 
development of individual liberty. Yet 
the doctrine of state-control is directly 
opposed to individuality, and tends to re- 
press spontaneity of character. }j.rfdhv ayav 
— " do nothing too much " — was a favor- 
ite maxim with the proportion - loving 
Greeks ; and perhaps the time has already 
come when these words have a meaning 
for those who would lead us still further 
toward paternalism in government. At all 
events, thoughtful men, who are not car- 



lOO The Present Condition of 

ried away by the spirit of the age, or who, 
like Lowell, have become distrustful of 
that sign from having lived to see " several 
spirits of the age guiding in different di- 
rections," are beginning to sound a note 
of alarm, Woodrow Wilson notices the 
tendencies in this country favoring a cen- 
tralization of governmental functions, and 
finds the national government concerning 
itself with things that " do not lie even 
within the enlarged sphere of the federal 
government, and can be embraced within 
its jurisdiction only by wresting the Con- 
stitution to strange and yet unimagined 
uses." ' A still more authoritative warn- 
ing comes from Mr. John Fiske, who sees 
grave danger in that phase of paternal 
government with which this country is 
threatened : " Too much centralization is 
our danger to-day, as the weakness of the 
federal tie was our danger a century ago. 
. . . If the day should ever arrive 
(which God forbid !) when the people of 
different parts of our country shall allow 
their local affairs to be administered by 

' " Congressional Government," p. 54- 



Eccnioinical Science. loi 

prefects sent from Washington, and when 
the self-ofovernment of the States shall 
have been so far lost as that of the depart- 
ments of France, or even so far as that of 
the departments of England — on that day 
the progressive political career of the 
American people will have come to an 
end, and the hopes that have been built 
upon it for the future happiness and pros- 
perity of mankind will have been wrecked 
foreven" ' 

^ Atlantic Monthly, vol. lix., p. 228. 



VII. 

THE RESULTS OF OQR STUDY. 

What, then, is the outcome of our long- 
investigation into the methods and the 
doctrines of the new economists ? In the 
first place, a large part of the new political 
economy, we have seen, is made up of 
mere criticism— and criticism, too, for the 
most part, not of English economics, but 
of certain extravagant and wholly unwar- 
ranted misconceptions of the English eco- 
nomics. Then, as for the constructive side 
of the new school, we have found that in 
essential features this aspect of the school 
is not new ; and so far as, in a few details, 
the school is new, — so far as it attempts 
impossible things, or mixes matters best 
considered apart, or espouses political 
movements of doubtful expediency, — so 
far it would better have remained old. 
The conclusion of the whole matter seems. 



Economical Scieiice. 103 

to be that the new school really has no 
reason for existence. 

It Is by their works, after all, that we 
must know economists ; and the foregoing 
conclusion is not weakened, when we sub- 
ject the new school to the test of actual re- 
sults. As for the services of the English 
economists, it would hardly be too much 
to say that the whole science of political 
economy, as it is to-day, is the work of 
their hands. M. Comte, indeed, declares 
that the results of political economy are 
" radically sterile " ; and so they are, per- 
haps, as compared with the possible results. 
Granting, however, that we do not know 
much as yet about the laws of wealth ; 
still, the little that we do know must be 
credited to the Eno;lish economists. Nor 
can we deem even this little of slight im- 
portance, if we remember what economic 
legislation was a century ago. The 
Svv^edish statesman, Oxenstiern, sending 
his son to foreign courts, bade him ob- 
serve with how little wisdom the world 
was governed ; and this observation was 
easily made before the rise of English 



I04 Tlie Present Condition of 

economics. Cairnes calls ' London " a 
mighty monument of economic achieve- 
ment " ; and Bagehot declares^ that the 
teachings of political economy have set- 
tled down into the common-sense of the 
English people, ideas that are paradoxes 
everywhere else having become axioms in 
England. The marvellous progress of 
Great Britain since 1776 shows at every 
step the influence of the " Wealth of Na- 
tions " 3 ; and each advance in economic 
knowledcfe since Smith's time has been 

' " Essays," etc., p. 232. 

- " Economic Studies," p. i. 

^ Few social reformers have so quickly secured recognition 
as Adam Smith. Already well known from his earlier writ- 
ings, Smith found an eager public awaiting the publication of 
his long-maturing views ; and the " Wealth of Nations " be- 
gan almost immediately to affect public opinion, and especial- 
ly the more authoritative part of public opinion. Buckle 
estimates Smith's influence by the number of times that the 
" Wealth of Nations " was cited in Parliament. According 
to tradition, Adam Smith declared that Pitt knew the " Wealth 
of Nations " better than the author himself knew the book, 
and it is certain that the great statesman owed many of his 
economic convictions to the Glasgow professor. The com- 
mercial treaty between France and England in 1786 was 
based on ideas far in advance of those commonly held at that 
time ; and the fact that leading* legislators in both countries 
were willing to breast a strong current of opposition for the 
sake of carrying through this treaty shows how far Smith's 



Economical Science. 105 

quickly turned to account in promoting 
Engfland's commercial greatness. The 
balance of trade theory, the navigation 
laws, and the colonial policy ' were among 
the first things to feel the effect of the 
more liberal ideas of commerce ; and free 
trade, the poor-law system, and a multi- 
tude of fiscal reforms are later achieve- 
ments of the English economics. 

What have the new economists done to 
compare with all this ? What people 
have they indoctrinated with new ideas ? 

views had been taken vip by influential men. In our own 
country Hamilton's remarkable economic writings plainly 
show an acquaintance with the "Wealth of Nations" ; and 
many members of the Convention of 1787 were familiar with 
the book. 

' Besides Adam Smith, Lord Sheffield, Sinclair, Arthur 
Young, and others combated the English colonial policy, ad- 
vising a general emancipation of colonies. But the specula- 
tions of these " closeted theorists " would probably have 
availed little with the " practical " statesmen of England, had 
it not been for the example afforded by the American col- 
onies. Seeing from her experience with this country that col- 
onies should be managed with a view to their best interests, 
England completely altered her system, making her colonies 
virtually independent. This change has been of the first im- 
portance to England. It is difficult to see how Canada and 
Australia, which hold so important a place in England's com- 
mercial relations, could have secured, under the old system, 
their present development. 



io6 The Present Coiiditioii of 

What economic reform have they effected ? 
What important principle underlying the 
phenomena of wealth have they discov- 
ered ? Indirectly, indeed, their work has 
not been in vain. They have emphasized 
the importance of historical research in 
economic method ; and even well-known 
truths will bear repetition. They have 
subjected fundamental principles to search- 
ing criticism ; and this is always a real 
service. Moreover, as regards direct as- 
sistance, they have given us great volumes 
of statistics of more or less value ; and 
individual economists have thrown liofht 
upon particular problems. These things, 
if we mistake not, constitute the sum of 
the benefits conferred by the new school 
upon political economy. 

It is not dif^cult to forecast the issue of 
this contest between the schools. Already 
the two sides are weary of the struggle, 
and are casting about for some means of 
reconciliation. Every one recognizes the 
discredit that attaches to the science from 
this lack of harmony among economists. 
One observer is filled with pity to see men 



Economical Science. 107 

thus wasting their energy in arguing, as 
the Greeks would have said, about the 
shadow of an ass, Treitschke calls the 
quarrel a wind-mill fight. Sensible men 
long ago dropped the controversy, and 
went about their business, careless as to 
whether their methods were called " His- 
torical " or " Orthodox." The later and 
more approved statements of the new 
method discover no essential differences 
from the old.' The English method has 

' Francis A. Walker, after giving an abstract of Cairnes's 
statement of the English method, continues (" Political Econ- 
omy," p. 15): " Nothing could be added to this admirable 
statement of Political Economy according to the so-called 
German school." Dr. Seligman formulates the leading prin- 
ciples of the new economics in this way (" Science Econ. Dis- 
cussion," p. 19) : " I. It discards the exclusive use of the 
deductive method, and intonates the necessity of historical 
and statistical treatment. 2. It denies the existence of im- 
mutable natural laws in economics, calling attention to the 
interdependence of theories and institutions, and showing 
that the different epochs or countries require different sys- 
tems. 3. It disclaims belief in the beneficence of the absolute 
laissez-faii'e system ; it maintains the close interrelation of 
law. ethics, and economics ; and it refuses to acknowledge 
the adequacy of a scientific explanation, based on the assump- 
tion of self-interest as the sole regulator of economic action." 
Dr. Seligman calls these the principles of the new economics ; 
but the old economics " discards the exclusive use of the 
deductive method," "denies the existence of immutable 



io8 TJie Present Condition of 

been severely tried, and has been found 
able to stand the test. The new school 
has pointed out possible dangers in the 
English method, and has protested against 
a careless disregard of those dangers. 
When this point shall have been sufficient- 
ly emphasized, there will be nothing to 
prevent the new economists from leaguing 
themselves with the English school in 
firm alliance against the ever-growing host 
of economic problems. 

How numerous and how grave these 
problems are need not be told here : for 
they crowd upon us at every step, and 
their danger is apparent at a single glance. 
They stand out in bold relief from the col- 
umns of every newspaper ; they confront 
us daily in the world of business ; they lie 
in wait behind the political movements of 
the time. So far from having done its 
work, economics, we should say, rather, is 
just beginning its mission. What a for- 

natural laws in economics " — in fact, does every one of the 
things enumerated above. One cannot help thinking that the 
new economists resemble the French people, who, according 
to a nice observer, do not know what they want, and are never 
satisfied until they get it. , 



Econo77ticaL Science. 109 

midable array of problems stare our states- 
men in the face ! Industrial and political 
" deals " and " bosses " are a constant 
menace to law and order ; inflation schemes 
and a false silver dollar hang over our 
monetary legislation like a Damoclesian 
sword; unscrupulous "rings" and corrupt 
municipal governments threaten the sta- 
bility of republican institutions ; uniting 
workmen and consolidating capitalists keep 
the industrial world in continual ferment ; 
paper-money and the banking questions, 
Chinese labor and greneral immieration, 
railroad control and postal telegraph, mer- 
chant shipping, giant monopolies, social- 
Ism, tariff reform — where will the list end ? 
— all press forward for immediate atten- 
tion. 

Some of these are old questions, which, 
as James Russell Lowell says, the '' sphinx 
of political and social economy who sits by 
the roadside has been proposing to man- 
kind from the beginning, and which man- 
kind have shown such a singular talent for 
answering wrongly" : but many of them 
are new and untried problems, that follow 



1 1 o TJie Present Condition of 

in the train of steam and electricity and 
congested populations. Whether new or 
old, these questions in many cases present 
difficulties well-nigh insuperable ; and in 
every case call for the exercise of the 
highest faculties of man. Well might 
Themistocles boast that, thougrh he could 
not play on any stringed instrument, he 
could make, out of a little village, a great 
and glorious city ; in some respects it 
seems harder now than ever to make a city 
that shall be oflorious as well as orreat. 

Bad as the case appears from a hasty 
glance, closer inspection makes the out- 
look hardly less portentous. The condi- 
tion of the best solution of these and 
other problems is the diffusion of sound 
economic ideas among the people. What 
with newspapers, primers, hand-books, and 
pamphlets much has been done in recent 
years to popularize political economy ; but 
vastly more remains to be done. " Delu- 
sions, especially economical delusions," 
says Lowell, "seem the only things that 
have any chance of an earthly immortal- 
ity" : and many a venerable fallacy, that 



Economical Science. 1 1 1 

was bowed down with age in the days of 
Adam Smith, shows its hoary front to-day 
in numerous articles of popular faith. 
Nor is it the people only that show the 
lack of economic training. Simon New- 
comb's experience of thirty years makes 
him conclude that " no really wise eco- 
nomic legislation by Congress is attain- 
able " ' ; and whoever has waded through 
the fallacy-reeking pages of the Congres- 
sional Record Q.2iXs. understand this opinion. 
Our indifference in the past to economic 
science is the more surprising from the 
exceptional character of our national his- 
tory ; for the development of this country 
in the last one hundred years has offered 
very unusual advantages for the study of 
economics. Commanding the markets of 
the world in four great staple commodities 
— cotton, tobacco, petroleum, the cereals, 
— and possessed of unrivalled facilities for 
the production of other leading articles of 
consumption, the United States has risen 
rapidly to a position almost first among 
commercial nations. Inexhaustible min- 

' "Science Econ. Discussion," p. 65. 



112 The Present Condition of 

eral deposits, cheap food, abundant capi- 
tal, skilful and energetic labor, marvellous 
organizing and executive ability — all are 
here ; so that whether or not we adopt the 
system that will most quickly develop 
these resources, the time must soon come 
when this country will lead the world in 
commercial standing. Moreover, the na- 
ture of our political institutions, as well as 
our material progress, has made this 
country a promising field for economic 
study : for the unfettered condition of in- 
dustrial elements here brings out more 
clearly than elsewhere the normal opera- 
tion of economic forces. 

Under these conditions one might have 
supposed that economic science would be 
cultivated here as nowhere else. Such, 
however, has not been the case. We have 
been so busy in producing and distributing 
wealth that we have found no time to con- 
sider the laws underlying these operations. 
Just now, indeed, we seem to be on the 
verge of a veritable renaissance of eco- 
nomic learning ; but the movement is of 
recent origin. Cliffe Leslie a few years 



Economical Science. i 1 3 

ago noticed ' the slight progress of eco- 
nomics here ; and Professor C. F. Dunbar 
found that, up to 1876, at least, the United 
States had " done nothing toward devel- 
oping the theory of political economy, 
notwithstanding their vast and immediate 
interests in its practical applications."^ 

Thus we see that, here in America, at 
any rate, economists can ill afford to waste 
their energies in discussing theoretical re- 
finements of method. They should rather 
husband all their resources for the purpose 
of grappling more successfully with ques- 
tions that are at once pressing and out- 
standingly difficult. Happily, the few 
younger economists here who are pleased 
to-call themselves Historical writers, are not 
prevented thereby from using the English 
method, as though they were to the man- 
ner born : and " Orthodox" results by any 
other name are just as good. 

Nor is it in America only that econo- 
mists would do well to turn from questions 
of method to the many practical problems 

^ Fortnightly Reznew, vol. xxxiv., p. 488. 
"^ North Americaji Review, January, 1S76. 



114 P'f'^sent Conditioii of Econoinical Science. 

that cry out for attention. As for scien- 
tific method in economics, the time seems 
now to have arrived when discussion is 
uncalled for, and when the question may 
safely be left to settle itself. Of course I 
understand with what peculiar grace this 
statement comes at the end of 114 pages 
of such discussion. But then the very ob- 
ject of these pages was to demonstrate the 
soundness of this view of the case : and if 
that object has been in any degree attained, 
or if further discussion is any more unwar- 
ranted — even ever so little more — than it 
was before, perhaps these pages might 
have served a less useful purpose. 

THE END. 



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Atkinson. Together with the Reply of E. M. Chamberlain, Rep- 
resenting the Labor Union, and Mr. Atkinson's Rejoinder. Cloth, 

75 cents ; paper ......... 40 

41 — The Fishery Question. A Summary of Its History and Analysis 

of the Issues Involved. By CHARLES IsHAM. i2mo, cloth, with 

Map of the Fishing Grounds. ...... 75 

42 — Bodyke : A Chapter in the Plistory of Irish Landlordism. By 

Henry Norman. 8vo, cloth, illustrated .... 75 
43 — Slav or Saxon, A Study of the Growth and Tendencies of 

Russian Civilization. By Wm. D. Foulke, A. M. Octavo, 

cloth 1 25 

45— The Old South and The New. By Hon. W. D. Kelley. 

Octavo, cloth ......... I 25 

46 — Property in Land. An essay on the New Crusade. By Henry 

Winn. Octavo, paper ....... 40 

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